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What changed in Maplebear Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Maplebear Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+675 added−814 removedSource: 10-K (2025-02-28) vs 10-K (2024-03-05)

Top changes in Maplebear Inc.'s 2024 10-K

675 paragraphs added · 814 removed · 547 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe have developed a number of initiatives throughout the employee life cycle to achieve this objective. Supporting Representation that Reflects the Available Talent Pool . Our recruitment processes are intended to promote access to hiring opportunities for representative talent pools.
Biggest changeSupporting a High-Performing Workforce One of our human capital priorities is building and maintaining the highest performing workforce we are able through attracting, developing and retaining qualified talent from diverse backgrounds at every level of our organization. We have developed a number of initiatives throughout the employee life cycle to achieve this objective. Accessing the Available Talent Pool .
Additionally, in order to improve collaboration among diverse teams, we have invested in resources to educate our employees on building an inclusive culture and on recognizing and managing bias. We also regularly survey employees on how effective our leadership has been in creating an equitable and inclusive workplace to discover new opportunities to build an inclusive community.
Additionally, in order to improve collaboration among diverse teams, we have invested in resources to educate our employees on building an inclusive culture and on recognizing and managing bias. We also regularly survey employees on how effective our leadership has been in creating an inclusive workplace to discover new opportunities to build an inclusive community.
When shopping for groceries, consumers want selection, quality, value, and convenience, and they shop in many different ways. Instacart started as a way for households to conveniently manage their weekly grocery shopping, a recurring and high order value consumer use case.
When shopping for groceries, consumers want selection, quality, affordability, and convenience, and they shop in many different ways. Instacart started as a way for households to conveniently manage their weekly grocery shopping, a recurring and high order value consumer use case.
To incentivize high performance, we aim to reward eligible employees with pay increases and equity awards in recognition of their contributions. We believe our compensation practices help us attract and retain talented and diverse employees in a competitive labor market. Supporting Our Employees .
To incentivize high performance, we aim to reward eligible employees with pay increases and equity awards in recognition of their contributions. We believe our compensation practices help us attract and retain talented employees in a competitive labor market. Supporting Our Employees .
We compete for customers based on factors such as the quality of customer experience, selection, quality, pricing, value, and convenience. • Brands . We compete for brands based on factors such as the breadth of our offerings, technology capabilities, ease of use, strength of data insights and analytics, our ability to innovate, consumer reach, and pricing. • Shoppers .
We compete for customers based on factors such as the quality of customer experience, selection, affordability, and convenience. • Brands . We compete for brands based on factors such as the breadth of our offerings, technology capabilities, ease of use, strength of data insights and analytics, our ability to innovate, consumer reach, and pricing. • Shoppers .
We make available on our investor relations website, free of charge, copies of these reports and other information as soon as reasonably practicable after we file such material with or furnish it to the SEC. The SEC also maintains a website that contains our SEC filings at www.sec.gov.
We make available on our investor relations website, free of charge, copies of these reports and other information as soon as reasonably practicable after we file such material with or furnish it to the SEC. The SEC also maintains a website including reports, proxy and information statements, and other information, that contains our SEC filings at www.sec.gov.
Retailers reach customers through both Instacart Marketplace, where customers can shop from their favorite retailers through our app or website, and retailers’ owned and operated online storefronts that are powered by Instacart Enterprise Platform, our end-to-end technology solution encompassing eCommerce, fulfillment, Connected Stores, ads and marketing, and insights.
Retailers reach customers through both Instacart Marketplace, where customers can shop from their favorite retailers through our app or website, and retailers’ owned and operated online storefronts that are powered by Instacart Enterprise Platform, our end-to-end technology solution encompassing e-commerce, fulfillment, Connected Stores, ads and marketing, and insights.
Our offerings are modular, allowing retail partners to pick and choose which technologies best fit their needs. These solutions work seamlessly together, so retailers can more efficiently integrate with Instacart than they can with multiple separate technologies. Key components of Instacart Enterprise Platform include: • eCommerce .
Our offerings are modular, allowing retail partners to pick and choose which technologies best fit their needs. These solutions work seamlessly together, so retailers can more efficiently integrate with Instacart than they can with multiple separate technologies. Key components of Instacart Enterprise Platform include: • e-commerce .
See the section titled “Risk Factors—Risks Related to Our Intellectual Property” for a more comprehensive description of risks related to our intellectual property. HUMAN CAPITAL As of December 31, 2023, we had a total of 3,380 full-time employees worldwide. We also engage with contractors, vendors, and consultants.
See the section titled “Risk Factors—Risks Related to Our Intellectual Property” for a more comprehensive description of risks related to our intellectual property. HUMAN CAPITAL As of December 31, 2024, we had a total of 3,265 full-time employees worldwide. We also engage with contractors, vendors, and consultants.
The laws and regulations govern many issues related to our business practices, including those regarding privacy, data security, data protection, pay and fee transparency, health information privacy and security, consumer protection, marketing and advertising, health and safety, food and product safety, zoning, sustainability, tax, insurance, employment, weights and measures, alcohol and other age-restricted products, worker classification, collective bargaining rights, internet usage and access, eCommerce, and electronic payments.
The laws and regulations govern many issues related to our business practices, including those regarding privacy, data security, data protection, pay and fee transparency, health information privacy and security, consumer protection, marketing and advertising, health and safety, import and export, food and product safety, zoning, sustainability, tax, insurance, employment, shopper rights, weights and measures, alcohol and other age-restricted products, worker classification, collective bargaining rights, internet usage and access, e-commerce, and electronic payments.
Because it offers brands a way to reach customers at the point of purchase and within minutes of delivery and consumption, our solution delivers highly measurable and strong ROI across all parts of the customer shopping journey, from awareness to consideration to purchase.
Because it offers brands a way to reach customers at the point of purchase and within minutes of delivery and consumption, our solution delivers highly measurable and strong return on investment across all parts of the customer shopping journey, from awareness to consideration to purchase.
These changes may occur immediately or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory, legislative, and governing bodies, such as federal, state, and local administrative agencies.
These changes may occur immediately or develop over time through judicial decisions or as new guidance or interpretations are provided by regulatory, legislative, 7 Table of Contents and governing bodies, such as federal, state, and local administrative agencies.
We completed our initial public offering (“IPO”) in September 2023, and our common stock is listed on the Nasdaq Global Select Market under the symbol “CART.” ADDITIONAL INFORMATION We intend to announce material information to the public through filings with the Securities and Exchange Commission (“SEC”), on the investor relations page of our website, which is located at investors.instacart.com, our blog, which is located at www.instacart.com/company/blog, press releases, public conference calls, and public webcasts.
Our common stock is listed on the Nasdaq Global Select Market under the symbol “CART.” ADDITIONAL INFORMATION We intend to announce material information to the public through filings with the Securities and Exchange Commission (“SEC”), on the investor relations page of our website, which is located at investors.instacart.com, our blog, which is located at www.instacart.com/company/blog, press releases, public conference calls, and public webcasts.
To help accomplish this, we support all of our managers with training and resources designed to help them create an inclusive environment within their teams. This includes fairly and equitably conducting performance reviews, considering promotion readiness, and, for eligible employees, providing opportunities for internal mobility.
To help accomplish this, we support all of our managers with training and resources designed to help them create an enriching environment within their teams. This includes conducting fair and objective performance reviews, considering promotion readiness, and, for eligible employees, providing opportunities for internal mobility. Fostering an Inclusive Environment .
Examples of such laws include the Telephone Consumer Protection Act of 1991 and related state laws, the Health Insurance Portability and Accountability Act of 1996, and various state privacy acts, including the California Consumer Privacy Act of 2018, the California Privacy Rights Act of 2020, and the Illinois Biometric Information Privacy Act.
Examples of such laws include the Telephone Consumer Protection Act of 1991, Section 5 of the FTC Act, and related state laws, the Health Insurance Portability and Accountability Act of 1996, and various state privacy acts, including the California Consumer Privacy Act of 2018, and the Illinois Biometric Information Privacy Act.
We compete for shoppers based on factors such as flexibility, earnings potential, safety and overall experience, and our brand. New services and offerings from competitors, trends in consumer shopping behavior, the subsiding effects of the COVID-19 pandemic and its variants, macroeconomic factors, and other conditions, events, trends, or circumstances also impact our ability to compete for each of our constituents.
We compete for shoppers based on factors such as flexibility, earnings potential, safety and overall experience, and our brand. New services and offerings from competitors, trends in consumer shopping behavior, macroeconomic factors, and other conditions, events, trends, or circumstances also impact our ability to compete for each of our constituents.
We power world class eCommerce storefronts for more than 600 retail banners and services as of December 31, 2023, from product discovery tools, to merchandising, to different payment models, to loyalty-as-a-service. • Fulfillment . We help retailers fulfill grocery orders directly from their stores through our community of dedicated shoppers.
We power world class e-commerce storefronts for approximately 600 retail banners and services as of December 31, 2024, from product discovery tools, to merchandising, to different payment models, to loyalty-as-a-service. • Fulfillment . We help retailers fulfill grocery orders directly from their stores through a community of dedicated shoppers.
Instacart is built for the entire grocery ecosystem, improving the experiences for each of our constituents and helping them succeed: • Retailers . We enable more than 1,500 retail banners to grow by providing technology that can accelerate the digital transformation of their entire business. • Customers .
Instacart is built for the entire grocery ecosystem, improving the experiences for each of our constituents and helping them succeed: • Retailers . We enable more than 1,800 retail banners as of December 31, 2024 to grow by providing technology that can accelerate the digital transformation of their entire business both online and in-store. • Customers .
Our philosophy is to provide our employees with market competitive and equitable compensation that rewards high performance. To ensure equitable compensation for our employees, we consider external market data as well as internal parity considerations for all compensation decisions. Periodically, under the direction of legal counsel, we conduct comprehensive reviews of employee compensation to help ensure equitable pay.
To ensure equitable compensation for our employees, we consider external market data as well as internal parity for all compensation decisions. Periodically, under the direction of legal counsel, we conduct comprehensive reviews of employee compensation to help ensure equitable pay practices.
By enabling visibility into key metrics like item popularity, inventory levels and availability, order sizes, delivery times, delivery ratings, and sales, Insights helps retailers optimize operations and provide better customer experiences.
Insights gives retailers near real-time visibility into key metrics like item popularity, inventory levels and availability, order sizes, delivery times, delivery ratings, and sales, which enables retailers to optimize operations and provide better customer experiences.
INSTACART TECHNOLOGY We built Instacart to serve the entire grocery ecosystem. The key pillars of our technology are Instacart Marketplace, Instacart Enterprise Platform, and Instacart Ads. Our solutions are underpinned by a shared foundation of technology, infrastructure, data insights, and fulfillment that leverages our scale and expertise specific to the grocery category. Our technology solutions are better together.
The key pillars of our technology are Instacart Marketplace, Instacart Enterprise Platform, and Instacart Ads. Our solutions are underpinned by a shared foundation of technology, infrastructure, data insights, and fulfillment that leverages our scale and expertise specific to the grocery category. Our technology solutions are better together. Since our founding, Instacart has powered more than one billion orders.
As of December 31, 2023, we also had approximately 130 copyright registrations. We also register domain names for certain websites that we use in our business, such as www.instacart.com, as well as similar variations to protect our brands and marks from cybersquatters. We continually review our development efforts to assess the existence and registrability of new intellectual property.
As of December 31, 2024, we also had approximately 162 copyright registrations. We also register domain names for certain websites that we use in our business, such as www.instacart.com, as well as similar variations to protect our brands and marks from cybersquatters.
(3) Instacart Marketplace We launched Instacart Marketplace in 2012, through which we help customers find their favorite products, provide an innovative ad business that inspires people to try new brands, connect customers to our dedicated shopper community, and help retailers and customers build deeper relationships.
Our technology and data insights drive efficiencies for retailers, customers, brands, and shoppers. Instacart Marketplace Through Instacart Marketplace we help customers find their favorite products, provide an innovative ad offering that inspires people to try new brands, connect customers to our dedicated shopper community, and help retailers and customers build deeper relationships.
In most instances, Instacart shoppers pick, pack, and deliver these orders, but retailers can also use our technology to enable orders that are picked and packed by their own employees, or use a combination of the two. ___________ (2) Based on shoppers who completed at least one order during the month ended December 31, 2023.
In most instances, Instacart shoppers pick, pack, and deliver these orders, but retailers can also use our technology to enable orders that are picked and packed by their own employees, or use a combination of the two. • Connected Stores .
We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners.
We continually review our development efforts to assess the existence and registrability of new intellectual property. 8 Table of Contents We control access to and use of our proprietary technology and other confidential information through the use of internal and external controls, including contractual protections with employees, contractors, customers, and partners.
Instacart helps retailers create a unified, seamless, and personalized experience across their online and in-store footprints by leveraging technologies like Caper Carts, Scan & Pay, Lists, Carrot Tags, FoodStorm, and Out of Stock Insights. • Ads and Marketing . Carrot Ads, our enterprise ads offering, brings the best of Instacart Ads to retailers’ owned and operated online storefronts and apps.
Instacart helps retailers create a unified, seamless, and personalized experience across their online and in-store footprints by leveraging technologies like Caper Carts, Carrot Tags, Eversight, FoodStorm, In-Store mode, Out of Stock Insights, and Storefront. • Ads and Marketing .
Today, customers can place orders for delivery or pickup across a variety of use cases including the weekly shop, bulk stock-up, convenience, and special occasions. Customers can select the fulfillment option and speed that best serve their needs.
Today, customers can place orders for delivery or pickup across a variety of use cases including the weekly shop, bulk stock-up, convenience, special occasions, from restaurants, and using our in-store technologies.
To ensure Instacart remains a welcoming environment for all employees, while also intentionally focusing on inclusion for historically marginalized talent and their advocates, we are constantly investing in our culture and creating opportunities to build community for all of our employees.
We believe that creating an inclusive environment not only drives performance but also fosters innovation, collaboration, and long-term success. To ensure Instacart remains a welcoming environment for all employees, while also intentionally focusing on inclusion for all talent, we are constantly investing in our culture and creating opportunities to build community for all of our employees.
We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website.
We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website. Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, as part of our investor relations website.
Members of our executive team personally sponsor ERGs, which are employee-led groups that help create a more inclusive culture and amplify the voices of employees with shared identities and experiences across the company. Instacart allocates funding to our ERGs every year for programming and initiatives that range from professional development sessions and volunteer events to belonging and engagement opportunities.
Members of our executive team personally sponsor ERGs and Instacart allocates funding to our ERGs every year for programming and initiatives that range from professional development sessions, employee networking opportunities, and volunteer events to belonging and engagement opportunities.
Ensuring Equitable Access to Opportunities while Minimizing Attrition . We recognize that hiring representative talent is just the first step; we also prioritize retaining underrepresented talent and work to ensure that all employees have equitable access to development, advancement, and internal opportunities.
We recognize that hiring exceptional talent is just the first step in facilitating employee success and building a high-performing workforce; we also prioritize retaining all talent and work to ensure that all employees have equal access to development, advancement, and internal opportunities.
If we are unable to compete effectively, our business and financial prospects would be adversely impacted.” 10 Ta ble of Contents GOVERNMENT REGULATION We are subject to a wide variety of complex laws and regulations in the United States and other jurisdictions in which we operate.
GOVERNMENT REGULATION We are subject to a wide variety of complex laws and regulations in the United States and other jurisdictions in which we operate.
Our board of directors and compensation committee oversee our human capital strategy, which is developed and managed under the leadership of our Chief Human Resources Officer, who reports to our Chief Executive Officer.
Our board of directors and compensation committee oversee our human capital strategy, which is developed and managed under the leadership of our Chief People Officer, who reports to our Chief Executive Officer. Compensating and Supporting Our Employees Instacart is committed to providing equitable compensation opportunities and rewarding employees who achieve results, embody our mission and values, and help others succeed.
We rely on a combination of patents, trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements, employee non-disclosure and invention assignment agreements, and other legal and contractual rights to establish and protect our proprietary rights. 11 Ta ble of Contents As of December 31, 2023, we had approximately 420 issued patents in the United States and approximately 520 patent applications (including active Patent Cooperation Treaty applications) pending in the United States and globally.
We rely on a combination of patents, trademarks, copyrights, trade secrets, license agreements, confidentiality procedures, non-disclosure agreements, employee non-disclosure and invention assignment agreements, and other legal and contractual rights to establish and protect our proprietary rights.
We have a wide breadth of advertising solutions, including Sponsored Product ads, display ads, coupons, and brand pages, to meet all of our brand partners’ needs. Instacart Ads also enables brands to learn more about general consumer behavior from discovery to purchase, offering valuable insights about how to optimize their advertising spend.
We have a wide breadth of advertising solutions, including Sponsored Product ads, display ads, coupons, and brand pages, to meet all of our brand partners’ needs.
Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, as part of our investor relations website. 13 Ta ble of Contents Information found on, or accessible through these websites is not part of, and is not incorporated into, this Annual Report on Form 10-K or in any other report or document we file.
Information found on, or accessible through these websites is not part of, and is not incorporated into, this Annual Report on Form 10-K or in any other report or document we file.
SALES AND MARKETING While our brand and leading market position enable us to benefit from organic, word-of-mouth growth, we use sales and marketing to attract retailers, customers, brands, and shoppers and grow the pie for all of our constituents. Consumer Marketing We have built an efficient sales and marketing engine to support our organic motion and drive growth.
Instacart Ads also enables brands to learn more about general consumer behavior from discovery to purchase, offering valuable insights about how to optimize their advertising spend. 6 Table of Contents SALES AND MARKETING While our brand and leading market position enable us to benefit from organic, word-of-mouth growth, we use sales and marketing to attract retailers, customers, brands, and shoppers and grow the pie for all of our constituents.
Compensating and Supporting Our Employees Instacart is committed to providing equitable compensation opportunities and rewarding employees who achieve results, live our mission and values, and help others succeed. We also believe in supporting our employees’ personal and professional growth as well as their health and wellness. Providing Equitable and Competitive Compensation .
We also believe in supporting our employees’ personal and professional growth as well as their health and wellness. Providing Equitable and Competitive Compensation . Our philosophy is to provide our employees with market competitive and equitable compensation that rewards high performance.
Evergreen engagement programs include our onboarding series, focus groups, and shopper commitment initiatives, among others. COMPETITION The markets in which we operate are highly competitive. We compete for retailers, customers, brands, and shoppers across each offering of our end-to-end technology suite based on a number of factors: • Retailers .
We compete for retailers, customers, brands, and shoppers across each offering of our end-to-end technology suite based on a number of factors: • Retailers .
This opens up new revenue streams for retailers and increases the profitability of online orders. Our retail partners can also utilize our suite of marketing solutions, from self-serve tools to fully customized strategic partnerships, to grow their business by serving targeted promotions to customers. • Insights . Insights gives retailers near real-time visibility into their operations.
Carrot Ads, our enterprise ads offering, brings the best of Instacart Ads to retailers’ and other partners’ owned and operated online storefronts and apps. Our retail partners can also utilize our suite of marketing solutions, from self-serve tools to fully customized strategic partnerships, to grow their business by serving targeted promotions to customers. • Insights .
For example, we offer conversations with members of our Employee Resource Groups (“ERGs”), to all candidates so they can get a better understanding of our culture. Lastly, we provide training to recruiters, hiring managers, and interviewers on equitable recruiting practices, with the goal of ensuring that all candidates are seen and evaluated fairly.
For example, we offer prospective candidates conversations with members of our Employee 9 Table of Contents Resource Groups (“ERGs”), which are employee-led groups open to all employees that help create an inclusive culture, to all candidates so they can get a better understanding of our culture.
We started by understanding what consumers want and then built enterprise-grade technologies that allow retailers to meet those needs. We want to enable any retailer, large or small, to drive success both online and in-store and serve their customers better in all of the ways they choose to shop.
We want to enable any retailer, large or small, to drive success both online and in-store and serve their customers better in all of the ways they choose to shop. We have demonstrated our ability to help our retail partners drive strong growth and stay competitive in a complex and increasingly digital industry.
As of December 31, 2023, we reach over 95% of households in North America, and help our customers shop at their favorite retailers and enjoy selection, quality, value, and convenience.
As of December 31, 2024, we reach 98% of households in North America, and help our customers shop at their favorite retailers, order from their favorite restaurants, and enjoy selection, quality, affordability, and convenience. Our membership program, Instacart+, offers expanded customer benefits including unlimited $0 delivery fees on orders over a certain size, and other exclusive benefits. • Brands .
We believe we have a significant opportunity to build awareness to fuel new customer acquisition, and we plan to prudently invest in brand marketing and other awareness campaigns in the future. 9 Ta ble of Contents Retail Partnerships We maintain a dedicated account management team that identifies and onboards new retailers and broadens adoption of our offerings.
We believe we have a significant opportunity to build awareness to fuel new customer acquisition and increase engagement, and we plan to prudently invest in brand marketing and other awareness campaigns in the future. COMPETITION The markets in which we operate are highly competitive.
As of December 31, 2023, we offer approximately 600,000 shoppers an immediate, flexible earnings opportunity that allows them to choose when and how much to work. (2) Shoppers are deeply valued members of the Instacart community, and we strive to make the shopping experience as seamless as possible and protect shoppers while they work.
(3) Shoppers are deeply valued members of the Instacart community, and we strive to make the shopping experience as seamless as possible and protect shoppers while they work so they can continue to deliver superior customer service.
As of December 31, 2023, more than 5,500 brands are using Instacart Ads and are now more easily discoverable as customers fill their digital carts. Instacart Ads offers brands a highly measurable ads offering that leverages first-party transaction data to move products off of store shelves more efficiently.
As consumers and retailers move online, brands can use Instacart Ads as an effective way to reach customers at the point of purchase and within minutes of delivery and consumption. Instacart Ads offers brands a highly measurable ads offering that leverages first-party transaction data to move products off of store shelves more efficiently.
(1) ___________ (1) Based on internal tests run across all brand partners using our Sponsored Product ads offering in the year ended December 31, 2023 and individual tests run for select brands or types of brands. 5 Ta ble of Contents • Shoppers .
(2) Based on internal tests run across all brand partners during the year ended December 31, 2024 and individual tests run for select brands or types of brands. (3) Based on shoppers who completed at least one order during the month ended December 31, 2024. 5 Table of Contents INSTACART TECHNOLOGY We built Instacart to serve the entire grocery ecosystem.
We are also devoted to investing in the development of our employees through learning opportunities to help them achieve their personal and professional goals. 12 Ta ble of Contents Fostering a Diverse Workforce and Cultivating a Culture of Belonging One of our human capital priorities is building and maintaining a high performing, diverse workforce — one that reflects the diversity of our customers and partners — at every level of our organization.
We are also devoted to investing in the development of our employees through learning tools and opportunities to help them achieve their personal and professional goals.
Shopper Marketing We maintain a dedicated shopper marketing team that attracts new shoppers as well as retains and engages our existing shopper base by using referral coupons, promotional campaigns, and evergreen engagement programs. Referral coupons are given to encourage shoppers to recommend Instacart to their connections. Promotional campaigns use shopper incentives to drive shopper activation and engagement.
Shopper marketing attracts new shoppers and retains our existing shopper base by using referral coupons, promotional campaigns, and engagement programs. To date, the majority of customers have come to Instacart through organic channels.
We provide discovery and attractive ROI for over 5,500 brands through our industry-leading advertising tools and insights purpose-built for the online grocery category. We estimate that on average, our ads deliver more than a 15% incremental sales lift, and in some cases twice that, for our brand partners.
We represent one of the largest and fast growing e-commerce channels for brands. We provide discovery and attractive return on investment for over 7,000 active brands through our industry-leading advertising tools and insights purpose-built for the online grocery category (1) .
For example, with limited exceptions, we require hiring managers of all mid and senior-level individual contributor and managerial roles to consider including at least one woman and one Black, Latinx, or Indigenous candidate at the panel interview stage. We have also implemented programs to attract talent from all backgrounds.
Our recruitment processes are intended to promote access to hiring opportunities for talented applicants from a variety of backgrounds. For example, we encourage hiring managers to consider a diverse group of qualified candidates at the panel interview stage. We have also implemented programs to attract qualified talent from all backgrounds.
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As of December 31, 2023, more than 1,500 national, regional, and local retail banners partner with Instacart. We have demonstrated our ability to help our retail partners drive strong growth and stay competitive in a complex and increasingly digital industry.
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We estimate that on average, our ads deliver more than a 15% incremental sales lift, and in some cases twice that, for our brand partners. (2) • Shoppers . As of December 31, 2024, we offer approximately 600,000 shoppers an immediate, flexible earnings opportunity that allows them to choose when and how much to work.
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For example, a busy parent may prefer the reliability of having their family’s groceries delivered every Sunday, but if they need a few items in the middle of the week, they can trust Instacart to help deliver the items they need with priority delivery (as fast as 30 minutes).
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We offer shoppers a mobile application (iOS and Android) that powers the entire shopper experience seamlessly. ___________ (1) In the fourth quarter of 2024, we updated our active brands calculation to incorporate certain methodology improvements, and we estimate such updates contributed approximately 500 active brands to our reported active brands as of December 31, 2024.
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Each order can be shopped for and delivered with care by one of the hundreds of thousands of shoppers who value the flexible earnings opportunities that Instacart provides. As consumers and retailers move online, brands can use Instacart Ads as a new way to reach customers at the point of purchase and within minutes of delivery and consumption.
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Our marketing strategy includes consumer marketing, retail partnerships, brand partnerships, and shopper marketing. Consumer marketing includes digital marketing campaigns across a variety of platforms and channels, referral coupons and incentives, and in-store marketing. We also collaborate to run co-marketing initiatives with retailers and brands to attract new customers.
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Our membership program, Instacart+, offers expanded customer benefits including unlimited free delivery on orders over a certain size, a reduced service fee, credit back on eligible pickup orders, and exclusive benefits. • Brands . We represent one of the largest and fast growing eCommerce channels for brands.
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If we are unable to compete effectively, our business and financial prospects would be adversely impacted.” SEASONALITY We experience seasonality in both the number of orders and GTV on Instacart, as well as in our advertising and other revenue.
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Since our founding, Instacart has powered more than one billion orders. This scale gives us unique insights into consumer buying behavior, needs, and trends across the entire grocery industry in North America. We then utilize these insights to enhance Instacart Enterprise Platform, ensuring retailers can best meet their customers’ needs across their owned and operated online and physical storefronts.
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We typically see lower levels of order volume in the second and third quarter, resulting from lower usage of our offerings during the spring and summer months, followed by higher levels of order volume during the holiday season.
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Similarly, Instacart Enterprise Platform enhances Instacart Marketplace, as our deep integration with retailers allows us to expand marketplace capabilities for our customers. Enabling a digital grocery experience is highly complex.
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In addition, our advertising and other revenue has historically been seasonally high in the fourth quarter and seasonally low in the first quarter in a given year as a result of how advertisers deploy their budgets. Seasonality will likely cause fluctuations in our financial results on a quarterly basis.
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Our machine learning algorithms process billions of data points each day (3) to optimize a range of decisions and tasks, including basket building, merchandising, personalization, ads quality, demand forecasting, order fulfillment, shopper fleet mobilization, dispatching, routing, fraud costs, and appeasements per order. Our technology and data insights drive efficiencies for retailers, customers, brands, and shoppers.
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As of December 31, 2024, we had approximately 692 issued patents in the United States and approximately 650 patent applications (including active Patent Cooperation Treaty applications) pending in the United States and globally.
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Furthermore, we have designed our technology infrastructure to scale in real time to accommodate demand spikes. We work with multiple third parties that provide cloud hosting services that allow us to quickly and efficiently scale our technology.
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Lastly, we provide training to recruiters, hiring managers, and interviewers on our recruiting practices, with the goal of ensuring that all candidates are seen and evaluated fairly. These efforts help ensure we have access to a diverse pool of talented candidates that strengthens our workforce’s overall capabilities. Ensuring Access to Opportunities while Minimizing Attrition .
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We collect billions of data points across millions of orders each quarter, more than one billion searches, billions of Sponsored Product ads impressions, hundreds of millions of shopper-customer interactions, and facilitate orders fulfilled from over 85,000 stores.
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(3) For the quarter ended December 31, 2023. Number of stores as of December 31, 2023. 6 Ta ble of Contents • Connected Stores .
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We are not only building our advertising solutions to benefit brands, but also customers and retailers. We believe Instacart Ads delivers a superior shopping experience and improves pricing for customers by giving them access to thousands of deals and discounts, which in turn drives larger average order values for our retail partners.
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Retailers are also able to leverage Carrot Ads, an Instacart Enterprise Platform product that brings Instacart Ads to retailers’ own eCommerce sites and expands the customer reach available to our brand partners. Shopper App We offer shoppers a mobile application (iOS and Android) that powers the entire shopper experience seamlessly. • Getting Started .
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Shoppers can download our mobile app and sign up within minutes. Onboarding includes entering a valid driver’s license, contact information, and taking a picture. Following a thorough background check, shoppers are provided with a virtual credit card and can begin shopping and earning the same day. • Batch Information .
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We give shoppers upfront information about each batch they view on Instacart. We tell them how much they will earn from Instacart, the estimated customer tip, number and type of items, store details, estimated driving distances, and more. Our batching algorithm offers shoppers chances to take multiple orders at once to maximize earnings. • Picking Technology .
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Once in a store, our shopper app recommends how to pick the highest-quality produce and the best replacement if an item is out of stock.
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Our picking technology is optimized for the complexities of grocery, where one order could include a bunch of kale, several ripe avocados, a pint of ice cream, and a pound of steak. • Shopper-Customer Chat . We provide shoppers with a number of in-app tools to help them communicate directly with customers to improve the quality of their shopping experience.
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Shoppers can send photos to customers and inquire directly about replacements, refunds, or other clarifications to give customers the chance to decide what would make their orders complete. This technology is informed by hundreds of millions of shopper-customer interactions. • Batching and Delivery .
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Our fulfillment technology facilitates order allocations and suggests optimal routes to reduce the total time a shopper is on a delivery. Our algorithms based on billions of data points decide in real time how to take customer orders and create the most efficient batch offers for shoppers, in order to maximize earnings opportunities.
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Our machine learning simulations run every minute to re-compute the optimal combination of batch offers. 7 Ta ble of Contents • Peak Earning Times . We give shoppers valuable information about the days and times that will offer the highest earning opportunities in specific areas through our Peak Earning Times feature.
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This helps shoppers plan for the week ahead and maximize their earnings potential.
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OUR GROWTH STRATEGIES We plan to continue to grow by delivering the best online grocery experience to more customers, increasing the number of retailers we partner with and deepening our relationships with existing retail partners, and increasing our advertising revenue. • Attract New Customers and Expand Use Cases .

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe number of customers and their level of engagement on Instacart may decline materially or fluctuate as a result of many factors, including, among other things: • dissatisfaction with the operation of, or pricing on, Instacart, including our customer support services; 19 Ta ble of Contents • the actual or perceived quality of service provided by shoppers, such as picking the wrong item, making a poor substitution for out of stock items, failing to deliver items on a timely basis or at all, or customers having negative experiences in their interactions with shoppers, particularly during demand surges; • macroeconomic uncertainty, inflation, elevated interest rates, supply chain challenges, cessation of government aid available during the COVID-19 pandemic, and actual or perceived risk of economic recession; • cost of using Instacart, including customer fees, compared to in-store shopping or other alternatives; • the actual or perceived quality of service, quality, pricing, and availability of products provided by retailers; • the breadth and variety of retailers that are available to customers on Instacart, including retailers with whom we have a limited or informal arrangement for availability on Instacart; • future public health outbreaks, or a future outbreak of disease or similar public health concern, as well as a return to pre-COVID shopping behavior; • negative publicity related to our brand, including as a result of safety incidents and other events; • actual or perceived public policy positions; • failure to maintain good relationships with shoppers resulting in fewer shoppers available for customers, particularly during peak demand; or • dissatisfaction with the user experience on our platform, new and current offerings, or changes we make to our offerings.
Biggest changeThe number of 12 Table of Contents customers and their level of engagement on Instacart may decline materially or fluctuate as a result of many factors, including, among other things: • dissatisfaction with the operation of, or pricing on, Instacart, including our customer support services, or the quality and performance of the offerings, services, and technology of our partners; • the actual or perceived quality of service provided by shoppers, such as picking the wrong item, making a poor substitution for out of stock items, failing to deliver items on a timely basis or at all, failing to complete requested tasks or otherwise follow customer instructions, or customers having negative experiences in their interactions with shoppers, particularly during demand surges; • cost of using Instacart, including customer fees, compared to in-store shopping or other alternatives, particularly for lower income consumers; • the actual or perceived value or quality of our membership offering and membership benefits; • the actual or perceived value or quality of service, or the quality, pricing, and availability of products provided by retailers; • the breadth and variety of retailers that are available to customers on Instacart, including retailers with whom we have a limited or informal arrangement for availability on Instacart; • macroeconomic uncertainty, including as a result of tariffs or other trade restrictions enacted by the United States and responses by foreign governments to such policies; • future public health outbreaks, or a future outbreak of disease or similar public health concern; • market acceptance of online grocery shopping; • negative publicity related to our brand, including as a result of safety incidents and other events; • actual or perceived public policy positions; • failure to maintain good relationships with shoppers resulting in fewer shoppers available for customers, particularly during peak demand; or • dissatisfaction with the user experience on our platform, new and current offerings, or changes we make to our offerings.
If we are unable to compete effectively, our business and financial prospects would be adversely impacted. • If we fail to cost-effectively engage shoppers on Instacart, or attract and retain shoppers, our business could be harmed. • Mergers or other strategic transactions by competitors or retailers could weaken our competitive position and adversely affect our business. • The failure to achieve increased market acceptance of online grocery shopping and our offerings could seriously harm our business. • We expect a number of factors to cause our results of operations and operating cash flows to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance. • If the contractor status of shoppers who use Instacart is successfully challenged, or if additional requirements are placed on our engagement of independent contractors, we may face adverse business, financial, tax, legal, and other consequences. • The trading price of our common stock may be volatile and could decline significantly and rapidly.
If we are unable to compete effectively, our business and financial prospects would be adversely impacted. • If we fail to cost-effectively engage shoppers on Instacart, or attract and retain shoppers, our business could be harmed. • The failure to achieve increased market acceptance of online grocery shopping and our offerings could seriously harm our business. • Mergers or other strategic transactions by competitors or retailers could weaken our competitive position and adversely affect our business. • We expect a number of factors to cause our results of operations and operating cash flows to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance. • If the contractor status of shoppers who use Instacart is successfully challenged, or if additional requirements are placed on our engagement of independent contractors, we may face adverse business, financial, tax, legal, and other consequences. • The trading price of our common stock may be volatile and could decline significantly and rapidly.
We may encounter unforeseen operating expenses, difficulties, complications, delays, and other factors, including as we expand our business, execute on strategic initiatives, and navigate macroeconomic uncertainty and any future public health concerns or outbreaks, which may result in losses or a failure to generate profitable growth in future periods.
We may encounter unforeseen operating expenses, difficulties, complications, delays, and other factors, including as we expand our business, execute on strategic initiatives, and navigate macroeconomic uncertainty and any future public health concerns or outbreaks, which may result in losses or a failure to generate or expand profitable growth in future periods.
Our limited history and experience operating our current business may also negatively impact our ability to plan strategic investments and initiatives to further expand our business and offerings, including to support our retail partners, customers, shoppers, and brand partners, certain of which may require significant capital expenditures and future operating expenses that may be difficult to forecast.
Our limited history and experience operating our current business may also negatively impact our ability to plan strategic investments and initiatives to further expand our business and offerings, including to support our retail partners, customers, brand partners, and shoppers, certain of which may require significant capital expenditures and future operating expenses that may be difficult to forecast.
In particular, we will need to improve our transaction processing and reporting, operational and financial systems, procedures, and controls. Our current and planned personnel, systems, procedures, and controls may not be adequate to support our future operations. We will require additional capital and management resources to grow and mature in these areas.
In particular, we will need to improve our transaction processing and reporting, operational and financial systems, procedures, and controls. Our current and planned personnel, systems, procedures, and controls may not be adequate to support our future operations. We may require additional capital and management resources to grow and mature in these areas.
Our planned and future offering enhancements may also subject us to new or unforeseen risks relating to on-demand food and consumer goods delivery. For example, we have added health attribute information, such as identifying products on Instacart as gluten- or dairy-free, and need to rely on third parties for the accuracy of such information.
Our new or planned future offering enhancements may also subject us to new or unforeseen risks relating to on-demand food and consumer goods delivery. For example, we have added health attribute information, such as identifying products on Instacart as gluten- or dairy-free, and need to rely on third parties for the accuracy of such information.
Such third parties may discontinue their products, cease to provide their products or service to us, go out of business, or otherwise cease to provide support for such products or services in the future.
Such third parties may discontinue their products or services, cease to provide their products or service to us, go out of business, or otherwise cease to provide support for such products or services in the future.
Any future determination to pay dividends on our capital stock will be at the discretion of our board of directors. In addition, our ability to pay dividends on our capital stock is limited by the terms of the Series A redeemable convertible preferred stock (“Series A Preferred Stock”) and may be further restricted under future contractual arrangements.
Any future determination to pay dividends on our capital stock will be at the discretion of our board of directors. In addition, our ability to pay dividends on our capital stock is limited by the terms of our Series A redeemable convertible preferred stock (“Series A Preferred Stock”) and may be further restricted under future contractual arrangements.
The terms of the Series A Preferred Stock also require us to obtain approval from the holders of the outstanding shares of Series A Preferred Stock for any cash dividends on our common stock in excess of a 5.0% annual dividend yield.
The terms of our Series A Preferred Stock also require us to obtain approval from the holders of the outstanding shares of our Series A Preferred Stock for any cash dividends on our common stock in excess of a 5.0% annual dividend yield.
If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities.
Additionally, if we are unable to conclude that our internal control over financial reporting is effective, or if we or our independent registered public accounting firm determines we have a material weakness in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities.
We have limited experience operating this expanded business model and may not be able to accurately predict and plan for the impacts it may have on our growth rates, revenue mix, gross margin and profitability, as well as outside factors that may impact our business model, such as changes in consumer shopping behavior, retailer preferences, competition, and macroeconomic factors.
We have limited experience operating this expanded business model and may not be able to accurately predict and plan for the impacts it may have on our growth rates, revenue mix, margin and profitability, as well as outside factors that may impact our business model, such as changes in consumer shopping behavior, retailer preferences, competition, and macroeconomic factors.
Further, if the insurance coverage we maintain is not adequate to cover losses that occur, or if we are required to purchase additional insurance for other aspects of our business, we could be liable for significant additional costs. Additionally, if any of our insurance providers becomes insolvent, it would be unable to pay any operations-related claims that we make.
If the insurance coverage we maintain is not adequate to cover losses that occur, or if we are required to purchase additional insurance for other aspects of our business, we could be liable for significant additional costs. Further, if any of our insurance providers becomes insolvent, it would be unable to pay any operations-related claims that we make.
Our ability to require, monitor and enforce these third parties’ information security practices is limited. Because third parties provide operational support to our business and process confidential and personal information on our behalf, we could experience materially adverse consequences as a result of cyberattacks or incidents experienced by those providers.
Our ability to require, monitor and enforce these third parties’ information security practices is limited. Because third parties provide operational support to our business and process confidential and personal information on our behalf, we could experience materially adverse consequences as a result of cyberattacks or incidents experienced by those third parties.
Such investments may also require diversion of financial resources from other projects, such as the development of Instacart and related offerings. If we are unable to manage our rapid growth effectively, it could have a material adverse effect on our business, results of operations, and financial condition.
Such investments may also require diversion of financial resources from other projects, such as the development of Instacart and related offerings. If we are unable to manage our growth effectively, it could have a material adverse effect on our business, results of operations, and financial condition.
Additionally, due to the timing of funding to a certain payment card issuer, we may experience an increase in short-term liabilities based on the day of the week of each reporting period. Due to this timing, our cash flows from operating activities may not be directly comparable from period to period.
Additionally, due to the timing of funding to a certain payment card issuer, we may experience an increase in short-term liabilities based on the day of the week of the last day of each reporting period. Due to this timing, our cash flows from operating activities may not be directly comparable from period to period.
While we do and will attempt to set prices based on our prior operating experience and customer, retailer, brand, and shopper feedback and engagement levels, our assessments may not be accurate or there may be errors in the technology used in our pricing, and we could be underpricing or overpricing our services.
While we do and will attempt to set prices for our services based on our prior operating experience and customer, retailer, brand, and shopper feedback and engagement levels, our assessments may not be accurate or there may be errors in the technology used in our pricing, and we could be underpricing or overpricing our services.
As a result, we have increased and expect to continue to increase our customer acquisition spend, including incentives, paid marketing, and brand marketing campaigns to acquire new customers and increase the engagement of our existing customers, which may harm our margin and profitability and our efforts to drive efficiencies in our operating expenses.
As a result, we have increased and may continue to increase our customer acquisition spend, including incentives, paid marketing, and brand marketing campaigns to acquire new customers and increase the engagement of our existing customers, which may harm our margin and profitability and our efforts to drive efficiencies in our operating expenses.
We have incorporated and may continue to incorporate additional artificial intelligence and machine learning (“AIML”), solutions into our platform, offerings, services, and features, including those based on large language models, and these applications may become more important to our operations or to our future growth over time.
We have incorporated and may continue to incorporate additional artificial intelligence and machine learning (“AIML”) solutions into our platform, offerings, services, and features, including those based on large language models, and these applications have become more important to our operations and to our future growth over time.
Fear of loss of customers or lack of customer adoption due to poor service quality or negative customer or shopper reviews or press may make retailers reluctant to join or remain on Instacart. The same negative network effects could occur as a result of trust and safety or fraud incidents.
Fear of loss of customers or lack of customer adoption due to poor service quality or negative customer or shopper reviews or press may make retailers reluctant to join or remain on Instacart. The same negative effects could occur as a result of trust and safety or fraud incidents.
Our future growth depends on the perceived value of our expanded offerings as a whole to retailers, customers, brands, and shoppers, as well as our ability to balance the effects of various strategic initiatives, including our focus on further scaling our operations to improve our margin and profitability.
Our future growth depends on the perceived value of our expanded offerings as a whole to retailers, customers, brands, shoppers, and strategic partners, as well as our ability to balance the effects of various strategic initiatives, including our focus on further scaling our operations to improve our margin and profitability.
Actions by operating system platform providers or application stores such as Apple or Google may affect our offerings or services or how we collect, use, and share data from end-user devices in connection with Instacart Ads.
Actions by operating system platform providers or application stores such as Apple or Google may also affect our offerings or services or how we collect, use, and share data from end-user devices in connection with Instacart Ads.
Although we believe that we comply with applicable requirements and that shoppers are properly classified as independent contractors, we may be required to make significant payments, including through settlements, penalties, and interest as a result of these audits.
Although we believe that we comply with applicable legal requirements and that shoppers are properly classified as independent contractors, we may be required to make significant payments, including through settlements, penalties, and interest as a result of these audits.
In addition, the internet infrastructure that we and users of our offerings rely on in any particular geographic area may be unable to support the demands placed upon it and could interfere with the speed and availability of Instacart.
In addition, the internet infrastructure that we and users of our offerings rely on in any particular geographic area may be unable to support the demands placed upon it and could interfere with the speed, quality, and availability of Instacart.
In particular, we have been and may continue to be subject to administrative audits with various state and local enforcement agencies, including audits related to shopper classification, state and local ordinance requirements, and unemployment insurance and workers’ compensation contributions.
In particular, we have been and may continue to be subject to administrative audits with various state and local enforcement agencies, including audits related to shopper classification, state statute and local ordinance requirements, and unemployment insurance and workers’ compensation contributions.
With respect to Instacart Ads, our current and potential competitors include, but are not limited to: (i) third-party platforms that assist retailers with monetization of their digital offerings for consumers, such as CitrusAd (acquired by Publicis Groupe), Criteo, and Quotient, (ii) first-party retailer-owned solutions that provide online advertising opportunities to brands on their owned and operated domains, such as Amazon, Kroger, Target, Walmart, and others, some of which are also retailers on Instacart, (iii) companies that provide eCommerce and fulfillment services for third parties, including retailers, which currently offer or may in the future offer advertising products, such as DoorDash and Uber Eats, and (iv) companies that offer established online advertising products that are not specifically limited to the grocery industry, such as those offered by Amazon, Google, Meta, and Snap.
With respect to Instacart Ads, our current and potential competitors include, but are not limited to: (i) third-party platforms that assist retailers with monetization of their digital offerings for consumers, such as CitrusAd (acquired by Publicis Groupe), Criteo, and Quotient, (ii) first-party retailer-owned solutions that provide online advertising opportunities to brands on their owned and operated domains, such as Amazon, Kroger, Target, Walmart, and others, some of which are also retailers on Instacart, (iii) companies that provide e-commerce and fulfillment services for third parties, including retailers, which currently offer or may in the future offer advertising products, such as DoorDash and Uber Eats, and (iv) companies that offer established online advertising products that are not specifically limited to the grocery industry, such as those offered by Amazon, Google, Meta, and Snap.
Our executive officers, directors, and greater than 5% stockholders, in the aggregate, beneficially own a significant portion of our outstanding common stock. Furthermore, certain of our current directors were appointed by our principal stockholders.
Furthermore, certain of our current directors were initially appointed by our principal stockholders. Our executive officers, directors, and greater than 5% stockholders, in the aggregate, beneficially own a significant portion of our outstanding common stock. Furthermore, certain of our current directors were initially appointed by our principal stockholders.
In particular, disruptions in the global supply chain, including those resulting from labor shortages, closures of manufacturing facilities, transportation restrictions and limitations, war and international conflicts, and increased demand for certain consumer products, have limited, and may continue to limit, the ability of our retail partners to obtain products, maintain stock of such products in a timely and cost-efficient manner, and otherwise respond to consumer demands.
In particular, disruptions in the global supply chain, including those resulting from labor shortages or disputes, closures of manufacturing facilities, transportation restrictions and limitations, war and international conflicts, and increased demand for certain consumer products, have limited, and may continue to limit, the ability of our retail partners to obtain products, maintain stock of such products in a timely and cost-efficient manner, and otherwise respond to consumer demands.
While the pace of our headcount expansion has slowed, we may continue to grow our number of employees in order to meet our business plans or comply with regulatory changes.
While the pace of our headcount expansion has slowed, we may grow our number of employees in order to meet our business plans or comply with regulatory changes.
If the amount of one or more operations-related claims were to exceed our applicable aggregate coverage limits, we would bear the excess, in addition to amounts already incurred in connection with deductibles, self-insured retentions, co-insurance, or otherwise paid by our insurance policy. Insurance providers have raised premiums and deductibles for many businesses and may do so in the future.
If the amount of one or more operations-related claims were to exceed our applicable aggregate coverage limits, we would bear the excess, in addition to amounts already incurred in connection with deductibles, self-insured retentions, co-insurance, or otherwise paid by us. Insurance providers have raised premiums, deductibles, and self-insured retentions for many businesses and may do so in the future.
If such mobile operating systems or app marketplaces limit or prohibit us from making our apps available to retailers, customers, brands, or shoppers, make changes that degrade the functionality of our apps, change the way we collect or use data, increase the cost of using our apps, impose terms of use unsatisfactory to us, alter how we collect fees, increase our compliance costs, impair or inhibit our ability to enter into partnerships or effectively market partnerships, or modify their search or ratings algorithms in ways that are detrimental to us, or if our competitors’ placement in such mobile operating systems’ app marketplace is more prominent than the placement of our apps, our growth could slow.
If such mobile operating systems or app marketplaces limit or prohibit us from making our apps available to retailers, customers, brands, or shoppers, make changes that degrade the functionality of our apps, change the way we collect or use data, increase the cost of using our apps, impose terms of use unsatisfactory to us, alter 48 Table of Contents how we collect fees, increase our compliance costs, impair or inhibit our ability to enter into partnerships or effectively market partnerships, or modify their search or ratings algorithms in ways that are detrimental to us, or if our competitors’ placement in such mobile operating systems’ app marketplace is more prominent than the placement of our apps, our growth could slow.
You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K, before making an investment decision.
You should consider and read carefully all of the risks and uncertainties described below, as well as other information included in this Annual Report on Form 10-K, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K, before making an investment 10 Table of Contents decision.
Certain brick-and-mortar retailers that have their own digital offering, such as Walmart, also have significant size, scale, geographic, and customer base advantages, which may allow them to grow online GTV or capture increasing share of the online grocery market or advertising budgets more effectively and at a faster rate than us.
Certain brick-and-mortar retailers that have their own digital offering, such as Walmart, also have significant size, scale, geographic, and customer base advantages, which may allow them to grow online sales or capture increasing share of the online grocery market or advertising budgets more effectively and at a faster rate than us.
Third parties may also gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. If we fail to cost-effectively engage shoppers on Instacart, or attract and retain shoppers, our business could be harmed.
Third parties may also gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveal competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position. If we fail to cost-effectively engage shoppers on Instacart, or attract and retain shoppers, our business could be harmed.
If we or the third parties we rely on experience a compromise to the confidentiality, integrity or availability of the systems, or data of our customers, shoppers, partners, or Instacart, we may experience adverse consequences, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations; reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse consequences.
If we or the third parties we rely on experience a compromise to the confidentiality, integrity, or availability of our or their systems, or to data of our customers, shoppers, partners, employees, or Instacart, we may experience adverse consequences, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse consequences.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and United Kingdom to the United States in compliance with law, such as the EEA’s and UK’s standard contractual clauses, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
Although there are currently various mechanisms that may be used to transfer personal data from the EEA and United Kingdom to the United States in compliance with law, such as the EEA’s and UK’s standard contractual clauses, certain of these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
States, localities, the U.S. federal government, and taxing authorities in other countries may seek to impose additional reporting, recordkeeping, and/or indirect tax collection obligations on our business that facilitate online commerce. For example, taxing authorities in the United States and other countries have required eCommerce platforms to calculate, collect, and remit indirect taxes for transactions taking place over the internet.
States, localities, the U.S. federal government, and taxing authorities in other countries may seek to impose additional reporting, recordkeeping, and/or indirect tax collection obligations on our business that facilitate online commerce. For example, taxing authorities in the United States and other countries have required e-commerce platforms to calculate, collect, and remit indirect taxes for transactions taking place over the internet.
For example, an increase in Instacart+ orders, changes in product categories shopped, reduced spend on more premium or discretionary products, or a shift toward convenience, priority, or rapid delivery orders, may result in a decrease in average order value. Such shifts may also negatively impact certain retailers’ and brands’ actual or perceived benefit from engaging with Instacart.
For example, an increase in Instacart+ orders, changes in product categories shopped, reduced spend on more premium or discretionary products, a shift toward convenience or priority, may result in a decrease in average order value. Such shifts may also negatively impact certain retailers’ and brands’ actual or perceived benefit from engaging with Instacart.
On a smaller scale, we may face litigation related to claims by shoppers for the actions of customers or third parties. We carry insurance for such incidents, including automobile liability and general liability insurance, although such policies do not cover all claims to which we are exposed and are not always adequate to indemnify us for all liability.
On a smaller scale, we regularly face litigation related to claims by shoppers for the actions of customers or third parties. We carry insurance for such incidents, including automobile liability and general liability insurance, although such policies do not cover all claims to which we are exposed and are not always adequate to indemnify us for all liability.
In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
In addition, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 44 Table of Contents 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
With respect to Instacart Marketplace, our current and potential competitors include, but are not limited to: (i) existing and well-established online grocery or shopping alternatives, including digital-first platforms, such as Amazon and Thrive Market, (ii) brick-and-mortar retailers that have their own digital and fulfillment offerings, such as Target and Walmart, some of which decide to partner with Instacart to complement their own offerings, (iii) companies that provide eCommerce and fulfillment services for third parties, including retailers, whether online or offline, such as DoorDash, Shipt (acquired by Target), and Uber Eats, (iv) digital-first platforms entering the grocery market by owning inventory, including DashMart (owned by DoorDash), Fresh Direct (owned by Getir), Getir, and Gopuff, which may include existing retailers on Instacart, which could eventually eliminate their need to partner with us or limit their use of Instacart Marketplace, (v) companies that provide eCommerce and fulfillment services that focus on discrete categories of products, such as alcohol or prescription delivery, including Alto Pharmacy, and (vi) companies that offer direct to consumer ingredient or meal offerings, such as Blue Apron or Misfits Market, some of which may partner with Instacart to complement their own offerings.
With respect to Instacart Marketplace, our current and potential competitors include, but are not limited to: (i) existing and well-established online grocery or shopping alternatives, including digital-first platforms, such as Amazon and Thrive Market, (ii) brick-and-mortar retailers that have their own digital and fulfillment offerings, such as Target and Walmart, some of which decide to partner with Instacart to complement their own offerings, (iii) companies that provide e-commerce and fulfillment services for third parties, including retailers, whether online or offline, such as DoorDash, Shipt (acquired by Target), and Uber Eats, (iv) digital-first platforms entering the grocery market by owning inventory, including DashMart (owned by DoorDash), Fresh Direct (owned by Getir), and Gopuff, which may include existing retailers on Instacart, which could eventually eliminate their need to partner with us or limit their use of Instacart Marketplace, (v) companies that provide e-commerce and fulfillment services that focus on discrete categories of products, such as alcohol or prescription delivery, including Alto Pharmacy, and (vi) companies that offer direct to consumer ingredient or meal offerings, such as Blue Apron (owned by Wonder Group) or Misfits Market, some of which may partner with Instacart to complement their own offerings.
As a result, our ability to plan for future operations and strategic initiatives, predict future results of operations, and plan for and model future growth in orders, GTV, revenue, expenses and prospects is subject to significant risk and uncertainty as compared to companies with longer and more consistent operating histories and in more stable macroeconomic environments and industries.
As a result, our ability to plan for future operations and strategic initiatives, predict future results of operations, and plan for and model future growth in orders, GTV, revenue, expenses and prospects is subject to significant risk and uncertainty as compared to companies with longer and more consistent operating histories and in more stable macroeconomic or regulatory environments and industries.
If the perceived value of our equity awards declines or experiences significant volatility (including as valuations of companies comparable to us decline due to overall market trends, inflation, and related market effects or otherwise), or increases such that prospective employees believe there is limited upside to the value of our equity awards, it may adversely affect our ability to recruit and retain key employees or result in us granting additional equity awards, which would result in additional stock-based compensation expense and further dilution to our stockholders.
If the perceived value of our equity awards declines or experiences significant volatility (including as valuations of companies comparable to us decline due to overall market trends, inflation, and related market effects or otherwise), or increases such that prospective employees believe there is limited upside to the value of our equity awards, it may adversely affect our ability to recruit and retain key employees or result in us granting additional equity 33 Table of Contents awards, which would result in additional stock-based compensation expense and further dilution to our stockholders.
In addition, consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanisms (such as browser signals from the Global Privacy Control) as a result of regulatory or legal developments, the adoption by consumers of browser settings or “ad-blocking” software, and the development and deployment of new technologies could materially impact our ability to collect data or reduce our ability to deliver relevant promotions or media, which could materially impair the results of our operations.
In addition, consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or requirements to respond to “do not track” mechanisms (such as browser signals from the Global Privacy Control) as a result of regulatory or legal developments, the adoption by consumers of browser settings or “ad-blocking” software, and the development and deployment of new technologies could materially impact our ability to collect and use data or reduce our ability to deliver relevant promotions or media, which could materially impair the results of our operations.
We face heavy competition for consumers in certain demographics, including those in younger age groups who prioritize use cases, features, and fulfillment options that are different from customers in older age groups, such as convenience and specific product categories, as well as those in different income groups who may prioritize value over convenience or selection.
We face heavy competition for consumers in certain demographics, including those in younger age groups who prioritize use cases, features, and fulfillment options that are different from customers in older age groups, such as convenience and specific product categories, as well as those in different income groups who may prioritize affordability over convenience or selection.
Our future growth depends in part on our ability to not only engage new retailers but also to retain and expand existing retailer engagement with Instacart. However, retailers may decrease their engagement with Instacart based on factors which may not be within our control or whose impacts are difficult to predict.
Our future growth depends in part on our ability to not only engage new retailers but also to retain and expand existing retailer engagement with Instacart. However, retailers may decrease their engagement with Instacart based on factors that may not be within our control or whose impacts are difficult to predict.
Additionally, we are subject to requirements imposed by app marketplaces such as those operated by Apple and Google, who may change their technical requirements or policies in a manner that adversely impacts the way in which we collect, use and share data from users.
Additionally, we are subject to requirements imposed by app marketplaces such as those operated by Apple and Google, who have and may further change their technical requirements or policies in a manner that adversely impacts the way in which we collect, use and share data from users.
The amount of influence we may have over these shopping habits and preferences, and the methods at our disposal to exercise such influence (including marketing and incentives), may be limited, and we are dependent on external influences over shopping habits, such as public health incidents and inclement weather, and macroeconomic factors such as inflationary pressures.
The amount of influence we may have over these shopping habits and preferences, and the methods at our disposal to exercise such influence (including marketing and incentives), may be limited, and we are dependent on external influences over shopping habits, such as public health incidents and inclement weather, and macroeconomic factors.
While we employ practices designed to monitor our compliance with the licenses of third-party open-source software and to shield our valuable proprietary source code from these open-source license requirements, we have not run a complete open-source license review and may inadvertently use third-party open-source software in a manner that exposes us to claims of non-compliance with the applicable terms of such license, that could require us to disclose source code of our proprietary software, prohibit us from charging fees for use of our proprietary software, or render our software temporarily unavailable.
While we employ practices designed to monitor our compliance with the licenses of third-party open-source software and to shield our valuable proprietary source code from these open-source 52 Table of Contents license requirements, we have not run a complete open-source license review and may inadvertently use third-party open-source software in a manner that exposes us to claims of non-compliance with the applicable terms of such license, that could require us to disclose source code of our proprietary software, prohibit us from charging fees for use of our proprietary software, or render our software temporarily unavailable.
If we are unable or choose not to expand our advertising markets, develop or pursue innovative advertising models and offerings, or expand our relationships with more retailers, or if we are unable to acquire new customers or increase the engagement of existing customers, we may not be able to successfully grow our advertising and other revenue.
If we are unable or choose not to expand our advertising markets, develop or pursue innovative advertising models and offerings, expand our relationships with more retailers, acquire new customers or increase the engagement of existing customers, or acquire new brand partners or increase the engagement of existing brand partners, we may not be able to successfully grow our advertising and other revenue.
Our business is subject to changing laws, rules, and regulations, including, without limitation, federal, state, and local laws, and in the future, country specific laws, governing the internet, eCommerce, and hardware devices, including electronic payments, privacy, data security, data protection, the use of AIML technologies, pay and fee transparency, health information privacy and security, consumer protection, marketing and advertising, gift cards, health and safety, food and product safety, product labeling and traceability, import and export, zoning and permitting, hardware device certification, sustainability, tax, insurance, employment, weights and measures, alcohol and other age-restricted products, and worker classification and compensation.
Our business is subject to changing laws, rules, and regulations, including, without limitation, federal, state, and local laws, and in the future, country specific laws, governing the internet, e-commerce, and hardware devices, including electronic payments, privacy, data security, data protection, the use of AIML technologies, pay and fee transparency, health information privacy and security, consumer protection, marketing and advertising, gift cards, health and safety, food and product safety, product labeling and traceability, import and export, zoning and permitting, hardware device certification, sustainability, environmental, tax, insurance, employment, weights and measures, alcohol and other age-restricted products, and worker classification compensation, and transparency.
Bugs or errors in our software, including open-source software that is incorporated into our code, misconfigurations of our systems, and unintended interactions between systems have in the past and could in the future result in our failure to comply with certain federal, state, or foreign reporting obligations, cause downtime that would impact the availability of our service to retailers, customers, brands, or shoppers, cause incorrect calculations relating to the payments we make to or fees we receive from or charge to retailers, customers, brands, or shoppers, or create vulnerabilities in our systems which bad actors may exploit to perpetrate fraud or otherwise harm our business.
Bugs or errors in our software, including open-source software that is incorporated into our code, misconfigurations of our systems, and unintended interactions between systems have in the past and could in the future result in our failure to comply with certain federal, state, or foreign reporting obligations, cause downtime that would impact the availability of our service to retailers, customers, brands, or shoppers, cause incorrect calculations relating to the prices or discounts available to consumers, cause incorrect calculations relating to the payments we make to or fees we receive from or charge to retailers, customers, brands, or shoppers, or create vulnerabilities in our systems which bad actors may exploit to perpetrate fraud or otherwise harm our business.
We regularly provide potentially dissatisfied customers with appeasement credits and refunds as well as incentives for future orders, which measures are intended to counteract any reputational harm and maintain customer satisfaction but are accounted for as direct reductions to our transaction revenue.
We regularly provide customers with appeasement credits and refunds as well as incentives for future orders, which measures are intended to counteract any reputational harm and maintain customer satisfaction but are accounted for as direct reductions to our transaction revenue.
Consequently, if shopper shortages lead to the inability of customers to place orders through Instacart or to delayed or incorrect orders, we may lose customers to another online grocery platform or to other modes of shopping, particularly customers in certain demographic groups who have historically been less prevalent users of Instacart and are more difficult to engage or retain, which would harm our growth, profitability, and results of operations.
Consequently, if shopper shortages lead to the inability of customers to place orders through Instacart or to delayed or incorrect orders, we may lose customers to other online grocery platforms or to other modes of shopping, particularly customers in certain demographic groups who have historically been less prevalent users of Instacart and are more difficult to engage or retain, which would harm our growth, profitability, and results of operations.
Acquisitions, strategic investments, partnerships, collaboration or commercial arrangements, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations.
Acquisitions, strategic investments, partnerships, collaborations, commercial arrangements, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition, and results of operations.
Our business depends on customers and shoppers accessing Instacart via a mobile device or, with respect to customers, a personal computer, and the internet. We may operate in jurisdictions that provide limited internet connectivity, particularly if we expand internationally.
Our business depends on customers and shoppers accessing Instacart via a mobile device or, with respect to customers, a personal computer or a Connected Stores device, and the internet. We may operate in jurisdictions that provide limited internet connectivity, particularly if we expand internationally.
We may also be subject to additional tax liabilities and related interest and penalties due to changes in U.S. federal, state, or international tax laws, administrative interpretations, decisions, policies, and positions, results of tax examinations, settlements, or judicial decisions, changes in accounting principles and changes to the business operations, as well as evaluation of new information that results in a change to a tax position taken in prior periods.
We have been and may in the future also be subject to additional tax liabilities and related interest and penalties due to changes in U.S. federal, state, or international tax laws, administrative interpretations, decisions, policies, and positions, results of tax examinations, settlements, or judicial decisions, changes in accounting principles and changes to the business operations, as well as evaluation of new information that results in a change to a tax position taken in prior periods.
However, these customers may be lower intent users of Instacart with reduced engagement compared to customers that we acquire organically, may never convert to paying Instacart+ members, or may discontinue using Instacart after they take advantage of our promotions.
However, these customers or other customers we acquire inorganically may be lower intent users of Instacart with reduced engagement compared to customers that we acquire organically, may never convert to paying Instacart+ members, or may discontinue using Instacart after they take advantage of our promotions.
Also, to the extent outstanding stock options or warrants to purchase our stock are exercised, RSUs settle, or the Series A Preferred Stock is converted, there will be further dilution. The amount of dilution could be substantial depending upon the size of the issuance or exercise.
Also, to the extent outstanding stock options to purchase our stock are exercised, RSUs settle, or our Series A Preferred Stock is converted, there will be further dilution. The amount of dilution could be substantial depending upon the size of the issuance.
To grow our business and be competitive, we must develop offerings, features, and functionality that reflect the constantly evolving nature of technology and the needs of retailers, consumers, brands, and shoppers. The success of these and any other enhancements or developments depend on several factors, including their timely introduction and completion, sufficient demand, and cost effectiveness.
To grow our business and be competitive, we must develop offerings, features, and functionality that reflect the constantly evolving nature of technology and the needs of retailers, consumers, brands, and shoppers. The success of these and any other enhancements or developments depend on several factors, including their timely 26 Table of Contents introduction and completion, sufficient demand, and cost effectiveness.
In particular, our proposed or completed acquisitions or collaborations may be subject to investigations or enforcement actions by antitrust regulatory bodies in the countries in which we operate, such as the Department of Justice and the Federal Trade Commission (“FTC”), which have recently increased their scrutiny of merger or collaboration activity, particularly in the technology sector.
In particular, our proposed or completed acquisitions or collaborations may be subject to investigations or enforcement actions by antitrust regulatory bodies in the countries in which we operate, such as 34 Table of Contents the Department of Justice and the Federal Trade Commission (“FTC”), which have recently increased their scrutiny of merger or collaboration activity, particularly in the technology sector.
Competitors may also offer fulfillment options from our retail partners, despite having no formal engagement with such retailers. Further, some of our current or potential competitors have, and may in the future continue to have, greater resources and access to larger consumer and shopper bases in a particular geographic area.
Competitors may also offer fulfillment options from our retail partners, despite 20 Table of Contents having no formal engagement with such retailers. Further, some of our current or potential competitors have, and may in the future continue to have, greater resources and access to larger consumer and shopper bases in a particular geographic area.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have an adverse effect on our reputation, brand, business, financial condition, and results of operations.
The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition 38 Table of Contents of large deductible or co-insurance requirements, could have an adverse effect on our reputation, brand, business, financial condition, and results of operations.
We may issue our capital stock or securities convertible into our capital stock from time to time in connection with a financing, acquisition, investments, or otherwise. Additional issuances of our stock will result in dilution to existing holders of our stock.
We may issue our capital stock or securities convertible into our capital stock from time to time in connection with a financing, acquisition, investments, or otherwise. Additional issuances of our capital stock will result in dilution to existing stockholder.
Failure to retain existing customers or acquire new customers may also harm our relationships and commercial arrangements with retailers and brands as well as our ability to attract new retailer and brand partners. Past and future increases in the fees that we charge our customers may also reduce overall engagement by our customers or negatively impact new customer acquisition.
Failure to retain existing customers or acquire new customers may also harm our relationships and commercial arrangements with retailers and brands as well as our ability to attract new retailer and brand partners. Past and future changes to the fees that we charge our customers may also reduce overall engagement by our customers or negatively impact new customer acquisition.
Accordingly, in the event of our liquidation or dissolution in bankruptcy or otherwise, the holders of the Series A Preferred Stock would receive their liquidation preference prior to any distribution being available to holders of our common stock.
Our Series A Preferred Stock ranks senior to our common stock. Accordingly, in the event of our liquidation or dissolution in bankruptcy or otherwise, the holders of our Series A Preferred Stock would receive their liquidation preference prior to any distribution being available to holders of our common stock.
If we are unable to attract shoppers on favorable terms or increase utilization of Instacart by existing shoppers, if we lose shoppers on Instacart, or if shoppers determine it is no longer economically worthwhile to provide services on Instacart due to factors that may be beyond our control, including the costs of gasoline, vehicles, or insurance, changes in consumer behaviors in grocery shopping (such as smaller order sizes), actual or perceived economic advantages of providing services with other companies that engage independent contractors, including our competitors, our growth objectives and our business and prospects could be seriously harmed.
If we are unable to attract shoppers on favorable terms or increase utilization of Instacart by existing shoppers, if we lose shoppers on Instacart, or if shoppers determine it is no longer economically worthwhile to provide services on Instacart due to factors that may be beyond our control, including the costs of gasoline, vehicles, or insurance, changes in consumer behaviors in grocery shopping, actual or perceived economic advantages of providing services with other companies that engage independent contractors, including our competitors, our growth objectives and our business and prospects could be seriously harmed.
In addition, our competitors include companies that provide point solutions for individual components of Instacart’s eCommerce offering such as picking technology and retail media network solutions. Our competitors may also make acquisitions or establish cooperative or other strategic relationships among themselves or with others, including retailers.
In addition, our competitors include companies that provide point solutions for individual components of Instacart’s e-commerce offering such as picking technology and retail media network solutions. Our competitors may also make acquisitions or establish cooperative or other strategic relationships among themselves or with others, including retailers.
We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy, data security, and data protection practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
We cannot be sure that our insurance coverage will be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy, 25 Table of Contents data security, and data protection practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
In addition, various news sources, bloggers, and other publishers often make statements regarding our historical or projected business or financial performance, and we cannot assure you of the reliability of any such information even if it is attributed directly or indirectly to us.
In addition, various news sources, bloggers, market research firms, and other publishers often make statements regarding our historical or projected business or financial performance, and we cannot assure you of the reliability of any such information even if it is attributed directly or indirectly to us.
In addition, we have granted RSUs and restricted stock to our employees and directors, which vest upon the satisfaction of a service-based vesting condition. Stock-based compensation expense related to these RSUs and other outstanding equity awards will result in increases in our expenses in future periods.
In addition, we have granted RSUs and restricted stock to our employees and directors, which primarily vest upon the satisfaction of a service-based vesting condition. Stock-based compensation expense related to these RSUs and other outstanding equity awards will result in fluctuations in our expenses in future periods.
We expect to rely on AIML solutions to help drive future growth in our business, but there can be no assurance that we will realize the desired or anticipated benefits from AIML or at all. We may also fail to properly implement or market our AIML solutions.
We expect to rely on AIML solutions to help drive future growth in our business and reduce costs, but there can be no assurance that we will realize the desired or anticipated benefits from AIML or at all. We may also fail to properly implement or market our AIML solutions.
In addition, we have experienced, and may in the future experience, disruptions, outages, and other performance problems due to a variety of other factors, including infrastructure changes, introductions of new functionality, human errors, capacity constraints due to an overwhelming number of customers accessing our offerings and technology capabilities simultaneously, website hosting disruptions, interruptions to business and operations due to malicious actors utilizing bots or other automated means to access Instacart, denial of service attacks, or other security-related incidents.
In addition, we have experienced, and may in the future experience, disruptions, outages, operational errors, and other performance problems due to a variety of other factors, including infrastructure changes, introductions of new functionality, defects in third-party software, human errors, capacity constraints due to an overwhelming number of customers accessing our offerings and technology capabilities simultaneously, website hosting disruptions, interruptions to business and operations due to malicious actors utilizing bots or other automated means to access Instacart, denial of service attacks, or other security-related incidents.
If we are not successful in our marketing efforts, we may not be able to retain our existing customers or convert first-time customers, including those using consumer incentives such as discount promotions, into customers who regularly use and engage with our offerings.
If we are not successful in, or reduce our marketing investments, we may not be able to retain our existing customers or convert first-time customers, including those using consumer incentives such as discount promotions, into customers who regularly use and engage with our offerings.
An increase in retailer operating costs, or other deterioration in the financial condition of retailers, whether due to macroeconomic conditions (such as inflation) or otherwise, could cause retailers to raise prices, renegotiate contract terms, or cease operations, which we expect may influence our retailer fee terms.
An increase in retailer operating costs, or other deterioration in the financial condition of retailers, whether due to macroeconomic conditions or otherwise, could cause retailers to raise prices, renegotiate contract terms, or cease operations, which we expect may influence our retailer fee terms.
If our arbitration agreements were found to be unenforceable, in whole 42 Ta ble of Contents or in part, or specific claims were required to be exempted from arbitration, we could experience an increase in our litigation costs and the time involved in resolving such disputes, and we could face increased exposure to potentially costly lawsuits, each of which could adversely affect our business, financial condition, and results of operations.
If our arbitration agreements were found to be unenforceable, in whole or in part, or specific claims were required to be exempted from arbitration, we could experience an increase in our litigation costs and the time involved in resolving such disputes, and we could face increased exposure to potentially costly lawsuits, each of which could adversely affect our business, financial condition, and results of operations.
We currently rely on a small number of third-party service providers to host or support a significant portion of Instacart, and any interruptions or delays in services from these third parties could impair the delivery of our offerings and harm our business.
We currently rely on a small number of third-party service providers to host or support a significant portion of Instacart technology infrastructure and data, and any interruptions or delays in services from these third parties could impair the delivery of our offerings and harm our business.
Further, the laws of some foreign countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. Moreover, policing unauthorized use of our technologies, trade secrets, and intellectual property may be difficult, expensive, and time-consuming.
Further, the laws of some foreign countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. Moreover, policing unauthorized use of our technologies, 50 Table of Contents trade secrets, and intellectual property may be difficult, expensive, and time-consuming.
Retailers could also experience downturns or fail, including due to macroeconomic pressures, fail to adopt additional offerings or fulfillment methods or fail to launch or utilize our offerings in the manner and timing that we expect, or cease using Instacart altogether for many reasons.
Retailers could also experience downturns or fail, including due to macroeconomic pressures, experience labor shortages or disputes, fail to adopt additional offerings or fulfillment methods or fail to launch or utilize our offerings in the manner and timing that we expect, or cease using Instacart altogether for many reasons.
For example, technologies in our employees’ and service providers’ homes may not be as robust as in our offices and could cause the networks, information systems, applications, and other tools available to employees and service providers to be more limited or less reliable than in our offices.
For example, technologies in our employees’ and service providers’ homes are often not as robust as in our offices and could cause the networks, information systems, applications, and other tools available to employees and service providers to be more limited or less reliable than in our offices.
Also, to the extent that our offerings depend upon the successful operation of third-party software, any undetected errors or defects in, or disruptions to the functionality of, such third-party software could prevent the deployment or impair the functionality of our offerings, delay new offering introductions, result in a failure of our offerings, and injure our reputation, which in each case could harm our financial condition and results of operations.
To the extent that our offerings depend upon the successful operation of third-party software, any undetected errors or defects in, or disruptions to the functionality of, such third-party software have in the past and could in the future prevent the deployment or impair the functionality of our offerings, delay new offering introductions, result in a failure of our offerings, and injure our reputation, which in each case could harm our financial condition and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe have not experienced any cybersecurity incidents over the past three years that have materially affected us, including our business strategy, results of operations, or financial condition.
Biggest changeWe have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our business strategy, results of operations, or financial condition. We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.
Our CISO relies on close collaboration with other internal infrastructure, product, and engineering teams to implement our cybersecurity risk mitigation measures.
Our CISO relies on close collaboration with other internal infrastructure, product, engineering, and legal teams to implement our cybersecurity risk mitigation measures.
This team is principally responsible for directing (1) our cybersecurity risk assessment processes, (2) our security processes, and (3) our responses to cybersecurity incidents; • We use external cybersecurity service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security processes; • We conduct cybersecurity awareness trainings for employees who have access to our IT systems; • We maintain a cybersecurity incident response plan and a security operations function so we can respond to cybersecurity incidents; and • We have implemented a third-party risk management process for key third-party service providers.
This team is principally responsible for directing (1) our cybersecurity risk assessment processes, (2) our security processes, and (3) our responses to cybersecurity incidents; • We use external cybersecurity service providers, where appropriate, to assess, test, or otherwise assist with aspects of our security processes; • We conduct periodic cybersecurity awareness trainings for employees who have access to our IT systems; • We maintain a cybersecurity incident response plan and a security operations function so we can respond to cybersecurity incidents and comply with legal and disclosure obligations; and • We have implemented a third-party risk management process for key third-party service providers.
The audit committee oversees management’s design, implementation, and enforcement of our cybersecurity risk management program. Management has overall responsibility for assessing, identifying, and managing material cybersecurity risks. Our VP of Engineering Infrastructure and our Chief Information Security Officer (“CISO”) lead the Company’s cybersecurity function. Our CISO supervises both our internal cybersecurity personnel and our external cybersecurity service providers.
The audit committee oversees management’s design, implementation, and enforcement of our cybersecurity risk management program. Management has overall responsibility for assessing, identifying, and managing material cybersecurity risks. Our Chief Technology Officer and our Chief Information Security Officer (“CISO”) lead the Company’s cybersecurity function. Our CISO supervises both our internal cybersecurity personnel and our external cybersecurity service providers.
Our management team, through our VP of Engineering Infrastructure and CISO, stays informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and incidents through various means, which include briefings with internal security personnel, review of threat intelligence and other information obtained from governmental, public or private sources, including external cybersecurity service providers, and receiving alerts and reports produced by security tools deployed in our IT environment.
Our management team, through our Chief Technology Officer and CISO, stays informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and incidents through various means, which include briefings with internal security personnel, review of threat intelligence and other information obtained from governmental, public or private sources, including external cybersecurity service providers, and receiving alerts and reports produced by security tools deployed in our IT environment.
The audit committee and our risk committee, a management committee overseeing our enterprise risk management program, receive reports from our CISO regarding key cybersecurity risks facing the company, our cyber risk management program, significant cybersecurity incidents involving us or our third-party service providers, and the progress of ongoing 63 Ta ble of Contents initiatives as well as the effectiveness of internal control and compliance mechanisms.
The audit committee and our risk committee, a management committee overseeing our enterprise risk management program, receive periodic reports from our CISO regarding key cybersecurity risks facing the company, our cyber risk management program, significant cybersecurity incidents involving us or our third-party service providers, and the progress of ongoing initiatives as well as the effectiveness of internal control and compliance mechanisms.
For certain risks from cybersecurity threats that may materially affect our business strategy, results of operations, or financial condition, see section titled “Risk Factors – Risks Related to Our Business and Industry - If we or the third parties we rely on experience a compromise to the confidentiality, integrity or availability of systems, or data of our customers, shoppers, partners’, or Instacart, we may experience adverse consequences, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations; reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse consequences.” Governance Our board of directors delegates the cybersecurity risk oversight function to its audit committee.
For a description of these risks, see the section titled “Risk Factors – Risks Related to Our Business and Industry - If we or the third parties we rely on experience a compromise to the confidentiality, integrity or availability of systems, or data of our customers, shoppers, partners’, or Instacart, we may experience adverse consequences, including but not limited to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations; reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse consequences.” 59 Table of Contents Governance Our board of directors delegates the cybersecurity risk oversight function to its audit committee.
Our CISO reports to our VP of Engineering Infrastructure, who has over 18 years of experience in leading software engineering teams in the technology industry, including at Yahoo!.
Our CISO reports to our Chief Technology Officer, who has over 25 years of software development experience and 15 years of experience in leading software engineering teams in the technology industry, including at Uber.
Item 1C. Cybersecurity Risk Management and Strategy We have implemented and maintain a cybersecurity risk management program that is designed to protect the confidentiality, integrity, and availability of our critical systems and information.
Item 1C. Cybersecurity Risk Management and Strategy We have implemented and maintain a cybersecurity risk management program that is designed to identify, assess, and manage material risks from cybersecurity threats to our critical systems and information.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough the results of these claims cannot be predicted with certainty, we believe that these claims, individually or in the aggregate, could have a material adverse impact on our business, financial condition, results of operations, and cash flows. 65 Ta ble of Contents Besides the matters described above, we are regularly subject to claims, lawsuits, arbitration proceedings, administrative actions, government investigations, and other legal and regulatory proceedings involving personal injury, intellectual property, including patent infringement, property damage, securities and shareholder claims, commercial and contract disputes, unfair competition, and consumer protection claims, including auto-renewal practices, pricing and fees, data protection and privacy, environmental, health and safety, appropriate disclosures of worker and customer rights and entitlements, weights and measures, compliance with regulatory requirements, and other matters.
Biggest changeBesides the matters described above, we are regularly subject to claims, lawsuits, arbitration proceedings, administrative actions, government investigations, and other legal and regulatory proceedings involving personal injury, intellectual property, including patent infringement, property damage, securities and stockholder claims, commercial and contract disputes, unfair competition, and consumer protection claims, including auto-renewal practices, pricing and fees, data protection and privacy, environmental, health and safety, appropriate disclosures of worker and customer rights and entitlements, weights and measures, compliance with regulatory requirements, and other matters.
As a result, we maintain a reserve related to potential tax, interest, or penalties that may be due, as further described in Note 10 — Commitments and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
As a result, we maintain a reserve related to potential tax, interest, or penalties that may be due, as further described in Note 9 — Commitments and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We believe that we comply with applicable requirements and that shoppers are properly classified as independent contractors; therefore, we dispute that we are obligated to provide such additional benefits under state law and plan to vigorously contest any adverse assessment or determination.
We believe that we comply with applicable legal requirements and that shoppers are properly classified as independent contractors; therefore, we dispute that we are obligated to provide such additional benefits under state law and plan to vigorously contest any adverse assessment or determination.
Securities Litigation On January 25, 2024, a purported shareholder filed suit against us and certain of our current and former officers and directors in the Northern District of California, on behalf of a putative class of purchasers of our common stock in the IPO or between September 19, 2023 and October 1, 2023.
Securities Litigation On January 25, 2024, a purported stockholder filed suit against us and certain of our current and former officers and directors in the Northern District of California, on behalf of a putative class of purchasers of our common stock in our IPO or between September 19, 2023 and October 1, 2023.
We are also currently involved in several putative class and collective actions, thousands of alleged individual claims, including those brought or threatened to be brought in arbitration or compelled to arbitrate pursuant to our Independent Contractor Agreement, and matters brought, in whole or in part, as representative actions under California’s Private Attorney General Act, Labor Code Section 2698, et seq., alleging that we misclassified shoppers as independent contractors and related claims.
We are also currently involved in several putative class and collective actions, thousands of alleged individual claims, including those brought or threatened to be brought in arbitration or compelled to arbitration pursuant to our independent contractor agreements, and matters brought, in whole or in part, as representative actions under California’s Private Attorney General Act, Labor Code Section 2698, et seq., alleging that we misclassified shoppers as independent contractors and related claims.
While we have accrued a legal reserve balance of $56 million as of December 31, 2023 relating to these misclassification claims and proceedings, as further described in Note 10 — Commitments and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, any actual losses incurred in connection with these claims against us may differ from the initial estimates of loss, including as a result of settlement negotiations, and such differences could be material.
While we have accrued a legal reserve balance of $57 million as of December 31, 2024 relating to these misclassification claims and proceedings, as further described in Note 9 — Commitments and Contingencies to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, any actual losses incurred in connection with these claims against us may differ from the initial estimates of loss, including as a result of settlement negotiations, and such differences could be material.
However, the results of litigation and arbitration are inherently unpredictable, including due to the timing of any lifting of existing stays or the timing and final amounts of settlements with adverse parties, and our chances of success on the merits for any proceeding remain uncertain.
However, the results of litigation and arbitration are inherently unpredictable, including due to the timing and final amounts of settlements with adverse parties, and our chances of success on the merits for any proceeding remain uncertain.
Other Litigation Matters In the ordinary course of our business, various parties have from time to time claimed, and may claim in the future, that we are liable for damages related to unpaid wages, missed breaks, premium or overtime pay, hazard pay, inadequate notice under the Worker Adjustment and Retraining Notification Act or its state equivalent, retaliation, denial of or interference with leave of absence, improper application of our paid time off or other policies, discrimination or harassment based on a protected characteristic, wrongful termination, or failure to accommodate a disability.
On October 29, 2024, we filed a motion to dismiss the amended complaint, which is pending the Court’s decision. 61 Table of Contents Other Litigation Matters In the ordinary course of our business, various parties have from time to time claimed, and may claim in the future, that we are liable for damages related to unpaid wages, missed breaks, premium or overtime pay, hazard pay, inadequate notice under the Worker Adjustment and Retraining Notification Act or its state equivalent, retaliation, denial of or interference with leave of absence, improper application of our paid time off or other policies, discrimination or harassment based on a protected characteristic, wrongful termination, or failure to accommodate a disability.
The complaint alleges violations of Sections 11 and 15 of the Securities Act of and Sections 10(b) and 20(a) of the Exchange Act in connection with the IPO, and seeks damages and attorneys’ fees, among other things. The case is at a very preliminary stage.
The complaint alleges violations of Sections 11 and 15 of the Securities Act and Sections 10(b) and 20(a) of the Exchange Act in connection with the IPO, and seeks damages and attorneys’ fees, among other things. An amended complaint also added the underwriters of our IPO as defendants.
For more information, see the section titled “Risk Factors—Risks Related to Our Legal and Regulatory Environment—If the contractor status of shoppers who use Instacart is successfully challenged, or if additional requirements are placed on our engagement of independent contractors, we may face adverse business, financial, tax, legal, and other consequences.” We are also involved in administrative audits with various state and local enforcement agencies, including audits related to shopper classification, state and local ordinance requirements, and unemployment insurance and workers’ compensation contributions, in California, New York, Washington, Pennsylvania, Wisconsin, New Jersey, Florida, and Alaska.
For more information, see the section titled “Risk Factors—Risks Related to Our Legal and Regulatory Environment—If the contractor status of shoppers who use Instacart is successfully challenged, or if additional requirements are placed on our engagement of independent contractors, we may face adverse business, financial, tax, legal, and other consequences” and the section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations—Shopper Classification Developments.
Further, while we believe we properly provide all requisite pay standards and benefits under Proposition 22, we may nonetheless face various claims involving disputes over such pay standards and benefits.
In addition, even though Proposition 22 was upheld, we may still face allegations that certain of our business practices do not satisfy all of the elements of Proposition 22. While we believe we properly provide all requisite pay standards and benefits under Proposition 22, we may nonetheless face various claims involving disputes over such pay standards and benefits.
None of the putative class or collective actions have progressed to or resulted in class certification. Those involving misclassification are stayed pending prior-filed cases or have motions to compel individual arbitration pending in court. We dispute any allegations of wrongdoing and intend to continue to defend ourselves vigorously in these matters.
Those involving misclassification have either been compelled to individual arbitration or have motions to compel individual arbitration which have been granted and are now pending appeal. 60 Table of Contents We dispute any allegations of wrongdoing and intend to continue to defend ourselves vigorously in these matters.
Regardless of the outcome, litigation and arbitration of these matters could have an adverse impact on us because of defense and settlement costs, individually and in the aggregate, diversion of management resources, and other factors. 64 Ta ble of Contents We also anticipate future claims, lawsuits, arbitration proceedings, administrative actions, and government investigations and audits in various jurisdictions challenging our classification of shoppers as independent contractors and not employees.
Regardless of the outcome, litigation and arbitration of these matters could have an adverse impact on us because of defense and settlement costs, individually and in the aggregate, diversion of management resources, and other factors.
Removed
The city also agreed not to sue or seek injunctive relief for periods after the effective date until Proposition 22 is declared unconstitutional. If Proposition 22 is unconstitutional, the city must meet and confer with Instacart before filing a new lawsuit.
Added
None of the putative class or collective actions have progressed to or resulted in class certification.
Removed
In California, Proposition 22 was expected to provide more legal certainty over the classification of full-service shoppers on Instacart from the time it became effective on December 16, 2020.
Added
We also anticipate future claims, lawsuits, arbitration proceedings, administrative actions, and government investigations and audits in various jurisdictions challenging our classification of shoppers as independent contractors and not employees. In California, Proposition 22 provides more legal certainty regarding the status of independent workers offering delivery services in California from the time it became effective on December 16, 2020.
Removed
However, on August 20, 2021, a judge in Alameda County Superior Court granted a writ that ordered the State of California not to enforce Proposition 22 on the ground that it is unconstitutional. On March 13, 2023, the appellate court largely reversed the superior court and effectively upheld Proposition 22. Plaintiffs have appealed the decision to the California Supreme Court.
Added
Although the constitutionality of Proposition 22 was subsequently challenged, on July 25, 2024, the California Supreme Court upheld Proposition 22 as constitutional. However, there may continue to be legal challenges, or legislative or other attempts to amend or otherwise invalidate the benefits, protections or the independent worker status provided by Proposition 22.
Removed
If the appellate court ruling is reversed by the California Supreme Court, we will face continued legal uncertainty over whether we can properly classify a shopper as an independent contractor in California.
Added
Any future judgments, settlements, or orders issued by a court or governmental body or otherwise in connection with any judicial, administrative, or legal proceeding that results in us being prohibited from continuing to use independent-contractor shoppers in the manner we currently do would materially impair our business, growth, and results of operations due to a variety of factors including but not limited to, our adoption of one or more alternative fulfillment strategies and the associated costs that would be required, defense and settlement costs, individually and in the aggregate, diversion of management resources, and such proceedings may result in additional contingency reserves for purposes of our financial statements.
Removed
Even if Proposition 22 is determined to be enforceable, we may still face allegations that certain of our business practices do not satisfy all of the elements of Proposition 22.
Added
We are also involved in administrative audits with various state and local enforcement agencies, including audits related to shopper classification, state and local ordinance requirements, and unemployment insurance and workers’ compensation contributions, in Alaska, Florida, New Jersey, New York, and Pennsylvania.
Removed
While we have not concluded that an adverse ruling relating to Proposition 22 is probable and cannot estimate the potential impact of such a ruling for purposes of our consolidated financial statements, an adverse ruling may result in additional legal proceedings that could result in additional contingency reserves for purposes of our financial statements and would have an adverse impact on us because of defense and settlement costs, individually and in the aggregate, diversion of management resources, and other factors.
Added
Although the results of these claims cannot be predicted with certainty, we believe that these claims, individually or in the aggregate, could have a material adverse impact on our business, financial condition, results of operations, and cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−19 removed7 unchanged
Biggest changeThe following table summarizes information relating to repurchases of our equity securities during the three months ended December 31, 2023 : Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in thousands) (in thousands) (in millions) October 1, 2023 to October 31, 2023 — $ — — $ — November 1, 2023 to November 30, 2023 940 $ 26.21 927 $ 476 December 1, 2023 to December 31, 2023 522 $ 24.20 522 $ 464 Total 1,462 1,449 ___________ (1) Shares repurchased includes shares repurchased and cancelled to satisfy withholding tax obligations related to vesting of certain restricted stock.
Biggest changeThe returns shown are based on historical results and are not intended to suggest future performance. 63 Table of Contents Issuer Purchases of Equity Securities The following table summarizes information relating to repurchases of our equity securities during the three months ended December 31, 2024: Total Number of Shares Purchased (1) Average Price Paid Per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program (in thousands) (in thousands) (in millions) October 1, 2024 to October 31, 2024 138 $ 39.62 138 $ 62 November 1, 2024 to November 30, 2024 — $ — — $ 312 December 1, 2024 to December 31, 2024 — $ — — $ 312 Total 138 138 ___________ 1 In June 2024, our board of directors authorized a $500 million share repurchase program, which was subsequently increased to $750 million in November 2024.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each index on September 19, 2023, the date our common stock began trading on Nasdaq Global Select Market, and its relative performance is tracked through December 31, 2023.
An investment of $100 (with reinvestment of all dividends) is assumed to have been made in our common stock and in each index on September 19, 2023, the date our common stock began trading on Nasdaq Global Select Market, and its relative performance is tracked through December 31, 2024.
In determining the authorization of the share repurchase program, including the amount authorized, our board of directors considered the trading price levels of our common stock, including relative to that of comparable companies, our cash position, and other relevant business, tax, and legal factors.
The share repurchase program has no expiration date. In determining the authorization of this share repurchase program, including the amount authorized, our board of directors considered the trading price levels of our common stock, including relative to that of comparable companies, our cash position, and other relevant business, tax, and legal factors.
Holders of Record As of February 29, 2024, there were 232 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners of our common stock represented by these record holders.
Holders of Record As of February 21, 2025, there were 126 holders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners of our common stock represented by these record holders.
As such, our board of directors believes that these factors will allow us to generate more value for our stockholders over the long term. The timing and actual number of shares repurchased may depend on a variety of factors, including price, general business and market conditions, and alternative investment opportunities.
As such, our board of directors believes that these factors will allow us to generate more value for our stockholders over the long term.
Removed
The returns shown are based on historical results and are not intended to suggest future performance. 67 Table of Contents Recent Sales of Unregistered Equity Securities From January 1, 2023 to (but not including) September 19, 2023 (the date of the filing of our registration statement on Form S-8, File No. 333-274569), we granted an aggregate of 10,118,320 RSUs under our 2018 Equity Incentive Plan to our employees to be settled in shares of our common stock.
Added
For more information regarding the risks associated with our share repurchase program, see the section titled “Risk Factors—Risks Related to Ownership of Our Common Stock—We may not realize the anticipated long-term stockholder value of our share repurchase program, and any failure to repurchase our common stock after we have announced our intention to do so may negatively impact our stock price.” 2 Excludes costs associated with the repurchases and the 1% excise tax accrued on the Company’s share repurchases as a result of the Inflation Reduction Act of 2022.
Removed
On September 18, 2023, in connection with our IPO, we issued 4.2 million shares of our common stock to current and former service providers upon the net exercise of options to purchase 9,201,168 shares of our common stock, with a weighted-average exercise price of $5.99 per share, after giving effect to the withholding of 5.0 million shares of our common stock underlying such options to satisfy the associated tax withholding and remittance obligations and the aggregate exercise price.
Removed
On September 18, 2023, in connection with our IPO, we issued approximately 2.8 million shares of our common stock to one accredited investor upon the net exercise of a warrant to purchase 7,431,530 shares of our common stock, with an exercise price of $18.52 per share, after giving effect to the withholding of approximately 4.6 shares of our common stock underlying such warrant to satisfy the exercise price.
Removed
On September 21, 2023, immediately subsequent to the closing of our IPO, we issued and sold 5,833,333 shares of our Series A Preferred Stock at a purchase price of $30.00 per share to one accredited investor in a private placement for total gross proceeds of $175 million.
Removed
None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering.
Removed
Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act because the issuance of securities did not involve a public offering or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer pursuant to benefit plans and contracts relating to compensation as provided under Rule 701.
Removed
The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed on the share certificates issued in these transactions.
Removed
All recipients had adequate access, through their relationships with us, to information about us. The sales of these securities were made without any general solicitation or advertising.
Removed
Use of Proceeds 68 Table of Contents On September 21, 2023, we completed our IPO in which we registered and sold an aggregate of 14,100,000 shares of our common stock for our account, and we registered an aggregate of 7,900,000 shares of our common stock that certain selling stockholders sold for their accounts.
Removed
The shares of common stock sold in the IPO were registered under the Securities Act pursuant to our registration statement on Form S-1, as amended (File No. 333-274569) (the “IPO Registration Statement”), which was declared effective by the SEC on September 18, 2023.
Removed
Our shares of common stock were sold at an initial public offering price of $30.00 per share, which generated aggregate gross proceeds of $423 million for our account and $237 million for the accounts of the selling stockholders. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC acted as representatives of the underwriters for the offering.
Removed
We received net proceeds from the IPO of approximately $392 million, after deducting underwriting discounts of $22 million and offering expenses of $9 million.
Removed
No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities, or (iii) any of our affiliates.
Removed
The net proceeds from our IPO and the proceeds from the private placement of Series A Preferred Stock that we completed immediately subsequent to the IPO were entirely used to satisfy our tax withholding and remittance obligations related to the settlement, vesting, and/or exercise of certain equity awards in connection with the IPO.
Removed
There has been no material change in the expected use of the net proceeds from our IPO and the private placement as described in the prospectus included in the IPO Registration Statement.
Removed
Issuer Purchases of Equity Securities In November 2023, our board of directors approved a share repurchase program with authorization to purchase up to an aggregate of $500 million of our common stock and in February 2024, our board of directors approved the repurchase of an additional $500 million of our common stock. The share repurchase program has no expiration date.
Removed
Repurchases may be made from time to time through open market repurchases or through privately negotiated transactions. Open market repurchases may be structured to occur in accordance with the requirements of Rule 10b-18 under the Exchange Act. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of shares of common stock under this authorization.
Removed
We are not obligated to acquire any particular amount of common stock, and we may terminate or suspend the share repurchase program at any time.
Removed
The fair value of our common stock was $25.88.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

115 edited+41 added−86 removed44 unchanged
Biggest changeResults of Operations The following table summarizes our results of operations for the periods indicated: Year Ended December 31, 2021 2022 2023 (in millions) Revenue $ 1,834 $ 2,551 $ 3,042 Cost of revenue (1) (2) 608 720 764 Gross profit 1,226 1,831 2,278 Operating expenses: Operations and support (1) (2) 262 252 344 Research and development (1) (2) 368 518 2,312 Sales and marketing (1) (2) 394 660 961 General and administrative (1) (2) 288 339 803 Total operating expenses 1,312 1,769 4,420 Income (loss) from operations (86) 62 (2,142) Other income (expense), net 12 (8) — Interest income 2 17 81 Income (loss) before provision for (benefit from) income taxes (72) 71 (2,061) Provision for (benefit from) income taxes 1 (357) (439) Net income (loss) $ (73) $ 428 $ (1,622) ___________ (1) Amounts include depreciation and amortization expense as follows: Year Ended December 31, 2021 2022 2023 (in millions) Cost of revenue $ 8 $ 20 $ 25 Operations and support 1 2 2 Research and development 3 4 4 Sales and marketing 2 5 8 General and administrative 2 3 4 Total depreciation and amortization expense $ 16 $ 34 $ 43 76 Table of Contents (2) Amounts include stock-based compensation expense as follows: Year Ended December 31, 2021 2022 2023 (in millions) Cost of revenue $ — $ — $ 18 Operations and support 1 — 90 Research and development 9 18 1,800 Sales and marketing 3 4 316 General and administrative 9 11 532 Total stock-based compensation expense $ 22 $ 33 $ 2,756 The following table summarizes the components of our consolidated statements of operations data, for each of the periods presented, as a percent of revenue.
Biggest changeResults of Operations The following table summarizes our results of operations for the periods indicated: Year Ended December 31, 2022 2023 2024 (in millions) Revenue $ 2,551 $ 3,042 $ 3,378 Cost of revenue (1) (2) 720 764 836 Gross profit 1,831 2,278 2,542 Operating expenses: Operations and support (1) (2) 252 344 278 Research and development (1) (2) 518 2,312 604 Sales and marketing (1) (2) 660 961 808 General and administrative (1) (2) 339 803 363 Total operating expenses 1,769 4,420 2,053 Income (loss) from operations 62 (2,142) 489 Other expense, net (8) — (3) Interest income 17 81 66 Income (loss) before provision for (benefit from) income taxes 71 (2,061) 552 Provision for (benefit from) income taxes (357) (439) 95 Net income (loss) $ 428 $ (1,622) $ 457 ___________ (1) Amounts include depreciation and amortization expense as follows: 70 Table of Contents Year Ended December 31, 2022 2023 2024 (in millions) Cost of revenue $ 20 $ 25 $ 37 Operations and support 2 2 2 Research and development 4 4 5 Sales and marketing 5 8 8 General and administrative 3 4 4 Total depreciation and amortization expense $ 34 $ 43 $ 56 (2) Amounts include stock-based compensation expense as follows: Year Ended December 31, 2022 2023 2024 (in millions) Cost of revenue $ — $ 18 $ 8 Operations and support — 90 13 Research and development 18 1,800 144 Sales and marketing 4 316 62 General and administrative 11 532 73 Total stock-based compensation expense $ 33 $ 2,756 $ 300 The following table summarizes the components of our consolidated statements of operations data, for each of the periods presented, as a percent of revenue: Year Ended December 31, 2022 2023 2024 (as a percent of revenue) (1) Revenue 100 % 100 % 100 % Cost of revenue 28 25 25 Gross profit 72 75 75 Operating expenses: Operations and support 10 11 8 Research and development 20 76 18 Sales and marketing 26 32 24 General and administrative 13 26 11 Total operating expenses 69 145 61 Income (loss) from operations 2 (70) 14 Other expense, net — — — Interest income 1 3 2 Income (loss) before provision for (benefit from) income taxes 3 (68) 16 Provision for (benefit from) income taxes (14) (14) 3 Net income (loss) 17 % (53) % 14 % ___________ (1) Totals of percent of revenue may not foot due to rounding. 71 Table of Contents Comparison of the Years Ended December 31, 2023 and 2024 Revenue Year Ended December 31, 2022 to 2023 2023 to 2024 2022 2023 2024 $ Change % Change $ Change % Change (in millions, except percentages) Transaction $ 1,811 $ 2,171 $ 2,420 $ 360 20 % $ 249 11 % Advertising and other 740 871 958 131 18 % 87 10 % Total revenue $ 2,551 $ 3,042 $ 3,378 $ 491 19 % $ 336 11 % 2024 Compared to 2023 The increase in transaction revenue during fiscal year 2024, compared to fiscal year 2023, was primarily driven by growth in GTV, which grew 10%, and increased fulfillment efficiencies, partially offset by increased investments in affordability initiatives and consumer incentives in fiscal year 2024.
General and Administrative Expense General and administrative expense primarily consists of compensation costs for administrative employees, including finance and accounting, human resources, policy, and legal; third-party consulting fees; allocations of various overhead and occupancy costs; depreciation expense; and amortization expense of patents and trademarks. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
General and Administrative Expense General and administrative expense primarily consists of compensation costs for administrative employees, including finance and accounting, human resources, policy, and legal; third-party consulting fees; allocations of various overhead and occupancy costs; depreciation expense; amortization expense of patents and trademarks; and taxes. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
We are presenting these non-GAAP financial measures to assist investors in seeing our business and financial performance through the eyes of management, and because we believe that these non-GAAP financial measures provide an additional tool for investors to use in comparing results of operations of our business over multiple periods with other companies in our industry.
We are presenting these Non-GAAP Measures to assist investors in seeing our business and financial performance through the eyes of management, and because we believe that these Non-GAAP Measures provide an additional tool for investors to use in comparing results of operations of our business over multiple periods with other companies in our industry.
We exclude depreciation and amortization expense and stock-based compensation expense as these are non-cash in nature.
We exclude depreciation and amortization expense and stock-based compensation expense as these are non-cash in nature.
In addition, we may enter into additional or expanded customer, retailer, brand, or other relationships, as well as agreements to acquire or invest in complementary businesses, products, teams, and technologies, including intellectual property rights, which could increase our cash requirements.
In addition, we may enter into additional or expanded retailer, customer, brand, or other relationships, as well as agreements to acquire or invest in complementary businesses, products, teams, and technologies, including intellectual property rights, which could increase our cash requirements.
For additional discussion on our operating leases, see Note 10 — Commitments and Contingencies to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Non-Cancellable Purchases Our non-cancellable purchase commitments are primarily related to infrastructure service contracts for technology platforms.
For additional discussion on our operating leases, see Note 9 — Commitments and Contingencies to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K. Non-Cancellable Purchases Our non-cancellable purchase commitments are primarily related to infrastructure service contracts for technology platforms.
Some of these limitations are that each of Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, and Adjusted EBITDA margin: • excludes stock-based compensation expense; • excludes payroll taxes related to stock-based compensation expense; • excludes depreciation and amortization expense, and although these are non-cash expenses, the assets being depreciated may have to be replaced in the future, increasing our cash requirements; • does not reflect the positive or adverse adjustments related to the reserve for sales and other indirect taxes or certain legal regulatory accruals and settlements; • does not reflect interest income which increases cash available to us; • does not reflect other income that may increase cash available to us; • does not reflect other income and expense that includes unrealized and realized gains and losses on foreign currency exchange; and • does not reflect provision for or benefit from income taxes that reduces or increases cash available to us.
Some of these limitations are that each of Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, and Adjusted EBITDA margin: • excludes stock-based compensation expense; • excludes payroll taxes related to stock-based compensation expense; • excludes depreciation and amortization expense, and although these are non-cash expenses, the assets being depreciated may have to be replaced in the future, increasing our cash requirements; • excludes restructuring charges; • does not reflect the positive or adverse adjustments related to the reserve for sales and other indirect taxes or certain legal regulatory accruals and settlements; • does not reflect interest income which increases cash available to us; • does not reflect other income that may increase cash available to us; • does not reflect other income or expense that includes unrealized and realized gains and losses on foreign currency exchange; and • does not reflect provision for or benefit from income taxes that reduces or increases cash available to us.
GTV consists of orders completed through Instacart Marketplace or services that are part of the Instacart Enterprise Platform. We believe that GTV indicates the health of our business, including our ability to drive revenue and profits, and the value we provide to our constituents.
GTV consists of orders including those completed through Instacart Marketplace or services that are part of the Instacart Enterprise Platform. We believe that GTV indicates the health of our business, including our ability to drive revenue and profits, and the value we provide to our constituents.
We exclude payroll taxes related to the vesting and settlement of certain equity awards, certain legal and regulatory accruals and settlements, net, reserves for sales and other indirect taxes, acquisition-related expenses, non-capitalizable expenses related to the public listing of our common stock, and issuance costs related to the issuance of our Series A Preferred Stock as these are not indicative of our operating performance.
We exclude payroll taxes related to the vesting and settlement of certain equity awards, certain legal and regulatory accruals and settlements, net, reserves for sales and other indirect taxes, acquisition-related expenses, restructuring charges, non-capitalizable expenses related to the public listing of our common stock, and issuance costs related to the issuance of our Series A Preferred Stock as these are not indicative of our operating performance.
Each performance obligation is satisfied at a point in time, upon the transfer of control of the services. Advertising and Other Revenue We generate revenue from the sale of advertising to companies that are interested in reaching end users on Instacart. Advertising products include Sponsored Product ads, display ads, coupons, and a variety of other online advertising services.
Each performance obligation is satisfied at a point in time, upon the transfer of control of the services. Advertising and Other Revenue We generate revenue from the sale of advertising to companies that are interested in reaching end users. Advertising products include Sponsored Product ads, display ads, coupons, and a variety of other online advertising services.
Revenue Share We generate revenue from a partnership with payment card issuers whereby shoppers use cards issued by the payment card issuers to pay for goods at the retailers’ point-of-sale. We earn a revenue share from the payment card issuers for transactions processed through these payment cards and record these amounts in the same period the underlying transaction takes place.
Revenue Share We generate revenue from partnerships with payment card issuers whereby shoppers use cards issued by the payment card issuers to pay for goods at the retailers’ point-of-sale. We earn a revenue share from the payment card issuers for transactions processed through these payment cards and record these amounts in the same period the underlying transaction takes place.
In particular, recent volatility in the global financial markets, including due to heightened inflation and rising interest rates and other macroeconomic conditions, geopolitical conflicts, and recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures could reduce our ability to access capital and negatively affect our liquidity in the future.
In particular, recent volatility in the global financial markets, including due to heightened inflation and elevated interest rates and other macroeconomic conditions, geopolitical conflicts, and recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures could reduce our ability to access capital and negatively affect our liquidity in the future.
Cash Flows from Investing Activities For the year ended December 31, 2023, net cash provided by investing activities was $135 million, comprised primarily of maturities of marketable securities of $301 million, partially offset by purchases of marketable securities of $110 million, and purchases of property and equipment, including capitalized internal-use software of $54 million .
For the year ended December 31, 2023, net cash provided by investing activities was $135 million, comprised primarily of maturities of marketable securities of $301 million, partially offset by purchases of marketable securities of $110 million, and purchases of property and equipment, including capitalized internal-use software, of $54 million .
We exclude depreciation and amortization expense and stock-based compensation expense as they are non-cash in nature and we exclude payroll taxes related to the vesting and settlement of certain equity awards and acquisition-related expenses as they are not indicative of our operating performance.
We exclude depreciation and amortization expense and stock-based compensation expense as they are non-cash in nature and we exclude payroll taxes related to the vesting and settlement of certain equity awards, acquisition-related expenses, and restructuring charges as they are not indicative of our operating performance.
We use Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, Adjusted EBITDA margin, adjusted cost of revenue, adjusted cost of revenue as a percent of GTV, adjusted operations and support expense, adjusted operations and support expense as a percent of GTV, adjusted research and development expense, adjusted research and development expense as a percent of GTV, adjusted sales and marketing expense, adjusted sales and marketing expense as a percent of GTV, adjusted general and administrative expense, adjusted general and administrative expense as a percent of GTV, adjusted total operating expenses, and adjusted total operating expenses as a percent of GTV in conjunction with GAAP measures to assess performance, to inform the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to discuss our business and financial performance with our board of directors.
We use Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, Adjusted EBITDA margin, adjusted cost of revenue, adjusted cost of revenue as a percent of GTV, adjusted operations and support expense, adjusted operations and support expense as a percent of GTV, adjusted research and development expense, adjusted research and development expense as a percent of GTV, adjusted sales and marketing expense, adjusted sales and marketing expense as a percent of GTV, adjusted general and administrative expense, adjusted general and administrative expense as a percent of GTV, adjusted total operating expenses, and adjusted total operating expenses as a percent of GTV (collectively “Non-GAAP Measures”) in conjunction with GAAP measures to assess performance, to inform the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to discuss our business and financial performance with our board of directors.
Refunds are accounted for as variable consideration and there is limited uncertainty in estimation given the short duration. In certain cases, end user fees received may be less than the amount of refunds, 92 Table of Contents coupons, incentives, and shopper payments applicable to a particular transaction. This shortfall is recorded within revenue in the consolidated statements of operations.
Refunds are accounted for as variable consideration and there is limited uncertainty in estimation given the short duration. In certain cases, end user fees received may be less than the amount of refunds, coupons, incentives, and shopper payments applicable to a particular transaction. This shortfall is recorded within revenue in the consolidated statements of operations.
We also offer software subscription services that enhance the online shopping experience to certain retailers and generate an immaterial amount of other revenue from software subscriptions. Revenue from our software subscription services is recognized ratably over the subscription period.
We also offer software subscription services that enhance the omnichannel shopping experience to certain retailers and generate an immaterial amount of other revenue from software subscriptions. Revenue from our software subscription services is recognized ratably over the subscription period.
Advertising and Other Revenue We generate advertising and other revenue primarily from: • the sale of advertising services to brands that are interested in reaching customers on Instacart; and • certain retailers for use of our software-as-a-service solution through Instacart Enterprise Platform that enhances the online shopping experience, with revenue recognized ratably over the subscription period.
Advertising and Other Revenue We primarily generate advertising and other revenue from: • the sale of advertising services to brands that are interested in reaching customers; and • certain retailers for use of our software-as-a-service solution through Instacart Enterprise Platform that enhances the omnichannel shopping experience, with revenue recognized ratably over the subscription period.
We have historically excluded stock-based compensation expense from Adjusted EBITDA, and management believes that excluding the related payroll tax expense is important and consistent, as such payroll tax expense is directly impacted by unpredictable fluctuations in our stock price and therefore may not be indicative of our core operating performance.
We have historically excluded stock-based compensation expense from Adjusted EBITDA, and management believes that excluding the related payroll tax expense is important and consistent, as such payroll tax expense is directly impacted by unpredictable fluctuations in our stock price and therefore may not be indicative 75 Table of Contents of our core operating performance.
Our revenue consists of transaction revenue and advertising and other revenue and is recognized in accordance with ASC 606, Revenue from Contracts with Customers. 91 Table of Contents Transaction Revenue We generate revenue primarily from fees received from end users and amounts paid by retailers for our transaction service, net of any coupons, incentives, and refunds, as well as payments to shoppers.
Our revenue consists of transaction revenue and advertising and other revenue and is recognized in accordance with ASC 606, Revenue from Contracts with Customers. Transaction Revenue We generate revenue primarily from fees received from end users and amounts paid by retailers for our transaction service, net of any coupons, incentives, and refunds, as well as payments to shoppers.
In addition, we believe Adjusted EBITDA is widely used by investors, securities analysts, ratings agencies, and other parties in evaluating companies in our industry as a measure of operational performance.
In addition, we believe Adjusted EBITDA is widely used by investors, securities analysts, rating agencies, and other parties in evaluating companies in our industry as a measure of operational performance.
Retailers reach customers through both Instacart Marketplace, where customers can shop from their favorite retailers through our app or website, and retailers’ owned and operated online storefronts that are powered by Instacart Enterprise Platform, our end-to-end technology solution encompassing eCommerce, fulfillment, Connected Stores, ads and marketing, and insights.
Retailers reach customers through both Instacart Marketplace, where customers can shop from their favorite retailers through our app or website, and retailers’ owned and operated online storefronts that are powered by Instacart Enterprise Platform, our end-to-end technology solution encompassing e-commerce, fulfillment, Connected Stores, ads and marketing, and insights.
We believe that these non-GAAP financial measures provide useful information to investors about our 82 Table of Contents business and financial performance, enhance their overall understanding of our past performance and future prospects, and allow for greater transparency with respect to metrics used by our management in their financial and operational decision making.
We believe that these Non-GAAP Measures provide useful information to investors about our business and financial performance, enhance their overall understanding of our past performance and future prospects, and allow for greater transparency with respect to metrics used by our management in their financial and operational decision making.
Adjusted Research and Development and Adjusted Research and Development as a Percent of GTV We define adjusted research and development expense as research and development expense excluding depreciation and amortization expense, stock-based compensation expense, payroll taxes related to stock-based compensation, and acquisition-related expenses.
Adjusted Research and Development Expense and Adjusted Research and Development Expense as a Percent of GTV We define adjusted research and development expense as research and development expense excluding depreciation and amortization expense, stock-based compensation expense, payroll taxes related to stock-based compensation, acquisition-related expenses, and restructuring charges.
Sales and Marketing Expense Sales and marketing expense primarily consists of advertising expenses, compensation costs for sales and marketing employees, third-party consulting fees, allocations of various overhead and occupancy costs, depreciation expense, and amortization expense of customer relationship intangible assets. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
Sales and Marketing Expense Sales and marketing expense primarily consists of advertising expenses, such as paid marketing, compensation costs for sales and marketing employees, third-party consulting fees, allocations of various overhead and occupancy costs, depreciation expense, and amortization expense of customer relationship intangible assets. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on 64 Table of Contents Form 10-K.
We also expect the amounts of payments to shoppers, coupons, customer and shopper incentives, and refunds to fluctuate over time depending on a number of factors.
We also expect the amounts of payments to shoppers, coupons, consumer and shopper incentives, and refunds to fluctuate over time depending on a number of factors.
Adjusted EBITDA, Adjusted EBITDA as a Percent of GTV, and Adjusted EBITDA Margin We define Adjusted EBITDA as net income (loss), adjusted to exclude (i) provision for (benefit from) income taxes, (ii) interest income, (iii) other income (expense), net, (iv) depreciation and amortization expense, (v) stock-based compensation expense, (vi) payroll taxes related to stock-based compensation expense, (vii) certain legal and regulatory accruals and settlements, net, (viii) reserves for sales and other indirect taxes, (ix) COVID-19 response initiatives, (x) acquisition-related expenses, and (xi) non-capitalizable expenses related to the public listing of our common stock and issuance costs related to the issuance of our Series A Preferred Stock.
Adjusted EBITDA, Adjusted EBITDA as a Percent of GTV, and Adjusted EBITDA Margin We define Adjusted EBITDA as net income (loss), adjusted to exclude (i) provision for (benefit from) income taxes, (ii) interest income, (iii) other expense, net, (iv) depreciation and amortization expense, (v) stock-based compensation expense, (vi) payroll taxes related to stock-based compensation expense, (vii) certain legal and regulatory accruals and settlements, net, (viii) reserves for sales and other indirect taxes, (ix) acquisition-related expenses, (x) restructuring charges, and (xi) non-capitalizable expenses related to the public listing of our common stock and issuance costs related to the issuance of our Series A Preferred Stock.
While we generated positive cash flows from operating activities during the year ended December 31, 2022 and 2023, our future cash flows from operating activities may fluctuate as a result of investments we continue to make across our organization. As a result, we may require additional capital resources to execute strategic initiatives to grow our business.
While we generated positive cash flows from operating activities during the years ended December 31, 2023 and 2024, our future cash flows from operating activities may fluctuate as a result of investments we continue to make across our organization. As a result, we may require additional capital resources to execute strategic initiatives to grow our business.
There are a number of limitations related to the use of Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, and Adjusted EBITDA margin rather than net income (loss), net income (loss) as a percent of GTV, and net income (loss) as a percent of revenue, which 83 Table of Contents are the most directly comparable GAAP measures.
There are a number of limitations related to the use of Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, and Adjusted EBITDA margin rather than net income (loss), net income (loss) as a percent of GTV, and net income (loss) as a percent of revenue, which are the most directly comparable GAAP measures.
Adjusted General and Administrative and Adjusted General and Administrative as a Percent of GTV We define adjusted general and administrative expense as general and administrative expense excluding depreciation and amortization expense, stock-based compensation expense, payroll taxes related to stock-based compensation, certain legal and regulatory accruals and settlements, net, reserves for sales and other indirect taxes, acquisition-related expenses, non-capitalizable expenses related to the public listing of our common stock, and issuance costs related to the issuance of the Series A Preferred Stock.
Adjusted General and Administrative Expense and Adjusted General and Administrative Expense as a Percent of GTV We define adjusted general and administrative expense as general and administrative expense excluding depreciation and amortization expense, stock-based compensation expense, payroll taxes related to stock-based compensation, certain 78 Table of Contents legal and regulatory accruals and settlements, net, reserves for sales and other indirect taxes, acquisition-related expenses, restructuring charges, non-capitalizable expenses related to the public listing of our common stock, and issuance costs related to the issuance of the Series A Preferred Stock.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures.
The preparation of these consolidated financial 82 Table of Contents statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs, and expenses and related disclosures.
We exclude depreciation and amortization expense and stock-based compensation expense as they are non-cash in nature and we exclude payroll taxes related to the vesting and settlement of certain equity awards and acquisition-related expenses as they are not indicative of our operating performance.
We exclude depreciation and amortization expense and stock-based compensation expense as they are non-cash in nature. We exclude payroll taxes related to the vesting and settlement of certain equity awards and restructuring charges as they are not indicative of our operating performance.
Cash Flows from Financing Activities For the year ended December 31, 2023, net cash used in financing activities was $30 million, comprised primarily of $570 million of tax withholding paid related to the net share settlement of equity awards and $36 million of repurchases of common stock, partially offset by $401 million of proceeds from the issuance of common stock upon IPO, net of underwriting discounts and $175 million of proceeds from the issuance of our Series A Preferred Stock.
For the year ended December 31, 2023, net cash used in financing activities was $30 million, comprised primarily of taxes paid related to the net share settlement of equity awards of $570 million and repurchases of common stock of $36 million, partially offset by proceeds from the issuance of common stock upon IPO, net of underwriting discount of $401 million and proceeds from the issuance of our Series A Preferred Stock of $175 million.
As of December 31, 2023, we had non-cancellable purchase obligations of $73 million, with $36 million to be paid within 12 months and the remainder thereafter. Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
As of December 31, 2024, we had non-cancellable purchase obligations of $278 million, with $106 million to be paid within 12 months and the remainder thereafter. Critical Accounting Policies and Estimates Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP.
Adjusted EBITDA, Adjusted EBITDA as a Percent of GTV, and Adjusted EBITDA Margin We define Adjusted EBITDA as net income (loss), adjusted to exclude (i) provision for (benefit from) income taxes, (ii) interest income, (iii) other income (expense), net, (iv) depreciation and amortization expense, (v) stock-based compensation expense, (vi) payroll taxes expense related to the vesting and settlement of certain equity awards, (vii) certain legal and regulatory accruals and settlements, net, (viii) reserves for sales and other indirect taxes, (ix) COVID-19 response initiatives, (x) acquisition-related expenses, and (xi) non-capitalizable expenses related to the public listing of our common stock and issuance costs related to the issuance of our Series A Preferred Stock.
Adjusted EBITDA, Adjusted EBITDA as a Percent of GTV, and Adjusted EBITDA Margin We define Adjusted EBITDA as net income (loss), adjusted to exclude (i) provision for (benefit from) income taxes, (ii) interest income, (iii) other expense, net, (iv) depreciation and amortization expense, (v) stock-based compensation expense, (vi) payroll taxes related to stock-based compensation expense, (vii) certain legal and regulatory accruals and settlements, net, (viii) reserves for sales and other indirect taxes, (ix) acquisition-related expenses, (x) restructuring charges, and (xi) non-capitalizable expenses related to the public listing of our common stock and issuance costs related to the issuance of our Series A Preferred Stock.
Starting in the fourth quarter of 2023 and going forward, we will continue to exclude employer payroll taxes related to the vesting and settlement of equity awards from our calculation of Adjusted EBITDA.
Starting in the fourth quarter of 2023 and going forward, we excluded employer payroll taxes related to the vesting and settlement of equity awards from our calculation of Adjusted EBITDA.
Contractual Obligations and Commitments Operating Leases Our operating lease commitments primarily include corporate offices and warehouse space. As of December 31, 2023, we had fixed lease payment obligations of $43 million, with $15 million to be paid within 12 months and the remainder thereafter.
Contractual Obligations and Commitments Operating Leases Our operating lease commitments primarily include corporate offices and warehouse space. As of December 31, 2024, we had fixed lease payment obligations of $27 million, with $14 million to be paid within 12 months and the remainder thereafter.
Cost of Revenue Cost of revenue primarily consists of third-party payment processing fees, expenses related to payment chargebacks, compensation costs of our employees primarily involved in fulfillment, hosting fees, insurance costs attributed to fulfillment, depreciation expense, and amortization expense of technology-related intangible assets and capitalized internal-use software. Compensation costs include salaries, taxes, benefits, bonuses, and stock-based compensation expense.
Cost of Revenue Cost of revenue primarily consists of third-party payment processing fees, expenses related to payment chargebacks, hosting fees, insurance costs attributed to fulfillment, compensation costs of our employees primarily involved in fulfillment, depreciation expense, and amortization expense of technology-related intangible assets and capitalized internal-use software.
As we continue to expand across fulfillment options and consumer use cases, we also expect to incur additional types of costs, such as certain labor costs, that can impact both our cost of revenue and profitability trends in the future.
As we continue to expand across fulfillment options and consumer use cases, we also expect to incur additional types of costs, such as certain labor costs, that can impact both our cost of revenue and profitability trends in the future. Additionally, we expect fluctuations in transaction revenue and advertising and other revenue as described above.
Furthermore, our overall marketing strategy will impact the spend mix between promotions and consumer incentives, as well as referrer credits, which are recorded as reductions of revenue and sales and marketing expense, respectively. In certain cases, these reductions of revenue can be more than fees received from retailers and customers.
Furthermore, our overall marketing strategy will impact the spend mix between activities that are recorded as reductions of revenue, such as promotions and consumer incentives, and activities that are recorded as sales and marketing expense, such as paid marketing and referrer credits. In certain cases, reductions of revenue can be more than fees received from retailers and customers.
Gross Transaction Value We define GTV as the value of the products sold based on prices shown on Instacart, in addition to applicable taxes, deposits and other local fees, customer tips, which go directly to shoppers, customer fees, which include flat subscription fees related to Instacart+ that are charged monthly or annually, and other fees.
Gross Transaction Value We define GTV as the value of the products sold through Instacart, including applicable taxes, deposits and other local fees, customer tips, which go directly to shoppers, customer fees, which include flat subscription fees related to Instacart+ that are charged monthly or annually, and other fees.
(2) Represents certain legal, regulatory, and policy expenses related to worker classification matters. (3) Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers.
(2) Represents employer payroll taxes related to the vesting and settlement of certain equity awards. (3) Represents certain legal, regulatory, and policy expenses related to worker classification matters. (4) Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers.
(2) Represents certain legal, regulatory, and policy expenses related to worker classification matters. (3) Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers.
(2) Represents employer payroll taxes related to the vesting and settlement of certain equity awards. (3) Represents certain legal, regulatory, and policy expenses related to worker classification matters. (4) Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers.
(2) Represents certain legal, regulatory, and policy expenses related to worker classification matters. (3) Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers.
(2) Represents employer payroll taxes related to the vesting and settlement of certain equity awards. (3) Represents certain legal, regulatory, and policy expenses related to worker classification matters. (4) Represents sales and other indirect tax reserves, net of abatements, for periods in which we were unable to collect such taxes from customers.
Advertising revenue is recognized upon delivery of clicks for Sponsored Product ads, upon delivery of impressions or over the contract term on a fixed fee basis for display ads, or upon redemptions of coupons.
Advertising revenue is recognized upon delivery of clicks, upon delivery of impressions, over the contract term on a fixed fee basis, or upon redemptions of coupons.
For more information regarding our use of these measures and reconciliation to the most directly comparable financial measures calculated in accordance with GAAP, see the section titled “—Non-GAAP Financial Measures.” Orders We define an order as a completed customer transaction to purchase goods for delivery or pickup from a single retailer on Instacart during the period indicated, including those completed through Instacart Marketplace or retailers’ owned and operated online storefronts that are powered by Instacart Enterprise Platform.
For more information regarding our use of these measures and reconciliation to the most directly comparable financial measures calculated in accordance with GAAP, see the section titled “—Non-GAAP Financial Measures.” Orders We define an order as a completed customer transaction to purchase goods for delivery or pickup primarily from a single retailer through Instacart during the period indicated, including those completed through Instacart Marketplace or 66 Table of Contents services that are part of the Instacart Enterprise Platform.
Provision for (Benefit from) Income Taxes Year Ended December 31, 2021 to 2022 2022 to 2023 2021 2022 2023 $ Change % Change $ Change % Change (in millions, except percentages) Provision for (benefit from) income taxes $ 1 $ (357) $ (439) $ (358) NM $ (82) 23 % ___________ “NM” - not meaningful 2023 Compared to 2022 The increase in the benefit from income taxes during fiscal year 2023 compared to fiscal year 2022 was primarily driven by the tax benefit related to the recognition of stock-based compensation expense, including certain restructurings, associated with the vested RSUs as a result of the satisfaction of the liquidity event-based vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO in the third quarter of 2023, as well as the generation of an increased amount of research and development tax credits.
Provision for (Benefit from) Income Taxes Year Ended December 31, 2022 to 2023 2023 to 2024 2022 2023 2024 $ Change % Change $ Change % Change (in millions, except percentages) Provision for (benefit from) income taxes $ (357) $ (439) $ 95 $ (82) 23 % $ 534 (122) % 2024 Compared to 2023 The increase in the provision for income taxes during fiscal year 2024, compared to fiscal year 2023, was primarily driven by the tax benefit related to the recognition of stock-based compensation expense, including certain restructurings associated with the vested RSUs as a result of the satisfaction of the liquidity event-based vesting condition upon the effective date of our registration statement on Form S-1 filed under the Securities Act in connection with our IPO in the third quarter of 2023.
For more information about how we use these non-GAAP financial measures in our business, the limitations of these measures, and reconciliations of these measures to the most directly comparable GAAP financial measures, see the section titled “—Non-GAAP Financial Measures.” In 2023, Adjusted EBITDA increased to $641 million, or 243% growth compared to 2022, primarily driven by revenue growth and efficiencies within adjusted total operating expenses and adjusted cost of revenue which grew slower than GTV.
For more information about how we use these non-GAAP financial measures in our business, the limitations of these measures, and reconciliations of these measures to the most directly comparable GAAP financial measures, see the section titled “—Non-GAAP Financial Measures.” In 2024, Adjusted EBITDA increased to $885 million, or 38% growth compared to 2023, primarily driven by revenue growth and efficiencies within adjusted total operating expenses.
Components of Results of Operations Revenue Our revenue consists of transaction revenue and advertising and other revenue. 72 Table of Contents Transaction Revenue We generate transaction revenue primarily from: • end users, whom we refer to as customers, (i) through service and delivery fees paid for arranging fulfillment services from shoppers and (ii) for monthly or annual Instacart+ memberships, our membership program, which offers unlimited free delivery on orders over a certain size, a reduced service fee, credit back on eligible pickup orders, and exclusive benefits; • retailers (i) through service fees in exchange for connecting retailers with customers to facilitate transactions on Instacart Marketplace and (ii) for orders placed through retailers’ owned and operated online storefronts powered by Instacart Enterprise Platform; and • a revenue share agreement with a third party that supplies payment cards to Instacart shoppers for in-store use.
Transaction Revenue We generate transaction revenue primarily from: • end users, whom we refer to as customers, (i) through service and delivery fees paid for arranging fulfillment services from shoppers and (ii) for monthly or annual Instacart+ memberships, our membership program, which offers unlimited $0 delivery fees on orders over a certain size, and other exclusive benefits; 67 Table of Contents • retailers (i) through service fees in exchange for connecting retailers with customers to facilitate transactions on Instacart Marketplace and (ii) for orders placed through retailers’ owned and operated online storefronts powered by Instacart Enterprise Platform; and • revenue share agreements with third parties that supply payment cards to Instacart shoppers for in-store use.
We believe that orders are an indicator of the scale and growth of our business as well as the value we bring to our constituents. 71 Table of Contents In 2023, orders increased to 269.2 million, or 3% growth compared to 2022. The increase in orders was driven primarily by increased engagement from new and existing customers.
We believe that orders are an indicator of the scale and growth of our business as well as the value we bring to our constituents. In 2024, orders increased to 294.0 million, or 9% growth compared to 2023. The increase in orders was driven primarily by increased engagement from new and existing customers.
These estimates have been based on our assessment of the facts and circumstances at each balance sheet date and are subject to change based on new information and future events. The outcomes of these legal proceedings are inherently uncertain.
Significant judgment is required to determine both the probability and the estimated amount of loss. These estimates have been based on our assessment of the facts and circumstances at each balance sheet date and are subject to change based on new information and future events. The outcomes of these legal proceedings are inherently uncertain.
Our Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, and Adjusted EBITDA margin can vary significantly as we continue to make substantial investments to fuel our growth and scale our business.
Our Adjusted EBITDA, Adjusted EBITDA as a percent of GTV, and Adjusted EBITDA margin can vary significantly as we continue to make substantial investments to fuel our growth and scale our business. Components of Results of Operations Revenue Our revenue consists of transaction revenue and advertising and other revenue.
Customers can select the fulfillment option and speed that best serve their needs. Each order can be shopped for and delivered with care by one of the hundreds of thousands of shoppers who value the flexible earnings opportunities that Instacart provides.
Each order can be shopped for and delivered with care by one of the hundreds of thousands of shoppers who value the flexible earnings opportunities that Instacart provides.
The following table provides a reconciliation of cost of revenue to adjusted cost of revenue: Year Ended December 31, 2021 2022 2023 (in millions, except percentages) Cost of revenue $ 608 $ 720 $ 764 Adjusted to exclude the following: Depreciation and amortization expense (8) (20) (25) Stock-based compensation expense — — (18) Adjusted cost of revenue $ 600 $ 700 $ 721 Cost of revenue as a percent of GTV 2.4 % 2.5 % 2.5 % Adjusted cost of revenue as a percent of GTV 2.4 % 2.4 % 2.4 % 85 Table of Contents Adjusted Operations and Support and Adjusted Operations and Support as a Percent of GTV We define adjusted operations and support expense as operations and support expense excluding depreciation and amortization expense, stock-based compensation expense, payroll taxes related to stock-based compensation, and COVID-19 response initiatives.
We exclude depreciation and amortization expense and stock-based compensation expense as they are non-cash in nature. 76 Table of Contents The following table provides a reconciliation of cost of revenue to adjusted cost of revenue: Year Ended December 31, 2022 2023 2024 (in millions, except percentages) Cost of revenue $ 720 $ 764 $ 836 Adjusted to exclude the following: Depreciation and amortization expense (20) (25) (37) Stock-based compensation expense — (18) (8) Adjusted cost of revenue $ 700 $ 721 $ 791 Cost of revenue as a percent of GTV 2.5 % 2.5 % 2.5 % Adjusted cost of revenue as a percent of GTV 2.4 % 2.4 % 2.4 % Adjusted Operations and Support Expense and Adjusted Operations and Support Expense as a Percent of GTV We define adjusted operations and support expense as operations and support expense excluding depreciation and amortization expense, stock-based compensation expense, payroll taxes related to stock-based compensation, and restructuring charges.
Adjusted Cost of Revenue and Adjusted Cost of Revenue as a Percent of GTV We define adjusted cost of revenue as cost of revenue excluding depreciation and amortization expense and stock-based compensation expense. We exclude depreciation and amortization expense and stock-based compensation expense as they are non-cash in nature.
Adjusted Cost of Revenue and Adjusted Cost of Revenue as a Percent of GTV We define adjusted cost of revenue as cost of revenue excluding depreciation and amortization expense and stock-based compensation expense.
We may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
We did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes. We may recognize a tax benefit only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
We recognize revenue in the amount that we have the right to invoice as advertising services are rendered, which occurs upon delivery of clicks for Sponsored Product ads, upon delivery of impressions or over the contract term on a fixed fee basis for display ads, or upon redemptions of coupons.
Our performance obligation is to continually promote a brand over the duration of the contractual term. We recognize revenue in the amount that we have the right to invoice as advertising services are rendered, which occurs upon delivery of clicks, upon delivery of impressions, over the contract term on a fixed fee basis, or upon redemptions of coupons.
We expect transaction revenue from customer and retailer fees to fluctuate from time to time as a result of customer and retailer fee optimizations and changes in the mix of customer use cases and fulfillment options. Over time, we expect year-over-year growth in transaction revenue to align more closely with growth in GTV relative to prior periods.
We expect transaction revenue from customer and retailer fees to fluctuate from time to time as a result of customer and retailer fee optimizations and changes in the mix of customer use cases and fulfillment options.
The following table provides a reconciliation of general and administrative expense to adjusted general and administrative expense: Year Ended December 31, 2021 2022 2023 (in millions, except percentages) General and administrative $ 288 $ 339 $ 803 Adjusted to exclude the following: Depreciation and amortization expense (2) (3) (4) Stock-based compensation expense (9) (11) (532) Payroll taxes related to stock-based compensation (1) — — (6) Certain legal and regulatory accruals and settlements, net (2) (46) (50) 4 Reserves for sales and other indirect taxes (3) (13) 1 35 Acquisition-related expenses (6) (5) — Other (4) (10) (5) (3) Adjusted general and administrative $ 202 $ 266 $ 297 General and administrative as a percent of GTV 1.2 % 1.2 % 2.6 % Adjusted general and administrative as a percent of GTV 0.8 % 0.9 % 1.0 % 87 Table of Contents ___________ (1) Represents employer payroll taxes related to the vesting and settlement of certain equity awards.
The following table provides a reconciliation of general and administrative expense to adjusted general and administrative expense: Year Ended December 31, 2022 2023 2024 (in millions, except percentages) General and administrative expense $ 339 $ 803 $ 363 Adjusted to exclude the following: Depreciation and amortization expense (3) (4) (4) Stock-based compensation expense (1) (11) (532) (73) Payroll taxes related to stock-based compensation (2) — (6) (3) Certain legal and regulatory accruals and settlements, net (3) (50) 4 (10) Reserves for sales and other indirect taxes (4) 1 35 14 Acquisition-related expenses (5) — (2) Restructuring charges (5) — — (4) Other (6) (5) (3) — Adjusted general and administrative expense $ 266 $ 297 $ 281 General and administrative expense as a percent of GTV 1.2 % 2.6 % 1.1 % Adjusted general and administrative expense as a percent of GTV 0.9 % 1.0 % 0.8 % ___________ (1) The year ended December 31, 2024 includes a $4 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for terminated employees in connection with the restructuring plan.
Excluding the impact of stock-based compensation incurred in connection with our IPO as described in the section titled “—Critical Accounting Policies and Estimates—Stock-Based Compensation,” research and development expense may increase on an absolute dollar basis and vary from period to period as a percent of revenue and as a percent of GTV for the foreseeable future as we continue to invest in research and development activities relating to ongoing improvements to, and maintenance of, our offerings, including the hiring of engineering, product development, and design employees to 74 Table of Contents support these efforts.
Research and development expense, exclusive of stock-based compensation expense, may increase on an absolute dollar basis and vary from period to period as a percent of revenue and as a percent of GTV as we continue to invest in research and development activities relating to ongoing improvements to, and maintenance of, our offerings, including the hiring of engineering, product development, and design employees to support these efforts.
We believe this adjustment is useful for investors in understanding our operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers.
We believe this adjustment is useful for investors in understanding our underlying operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers. (5) Represents severance payments and other related benefits for terminated employees in connection with the restructuring plan.
Our gross margin has varied and will continue to vary from period to period based on a number of factors, including (1) changes in revenue mix, changes in the mix of order type due to changes in mix of use cases and fulfillment options, consumer shopping behaviors (including from external drivers such as public health concerns), average order values, customer fee optimization, and levels of consumer incentives, (2) operational efficiencies, (3) negotiations with our retail partners, third-party payment processors, and hosting providers, and (4) macroeconomic factors, such as supply chain issues, rising interest rates, cessation of government aid and inflation, which have impacted and may continue to negatively impact growth in GTV and orders as well as spending by our brand partners.
Our gross margin has varied and will continue to vary from period to period based on a number of factors, including (1) changes in revenue mix, changes in the mix of order type due to changes in mix of use cases and fulfillment options, consumer shopping behaviors, average order values, customer fee optimization, and levels of consumer incentives, (2) operational efficiencies, (3) negotiations with our retail partners, third-party payment processors, and hosting providers, and (4) macroeconomic factors as discussed above.
The following table provides a reconciliation of sales and marketing expense to adjusted sales and marketing expense: Year Ended December 31, 2021 2022 2023 (in millions, except percentages) Sales and marketing $ 394 $ 660 $ 961 Adjusted to exclude the following: Depreciation and amortization expense (2) (5) (8) Stock-based compensation expense (3) (4) (316) Payroll taxes related to stock-based compensation (1) — — (2) Acquisition-related expenses (1) 2 4 Adjusted sales and marketing $ 388 $ 653 $ 639 Sales and marketing as a percent of GTV 1.6 % 2.3 % 3.2 % Adjusted sales and marketing as a percent of GTV 1.6 % 2.3 % 2.1 % ___________ (1) Represents employer payroll taxes related to the vesting and settlement of certain equity awards.
The following table provides a reconciliation of sales and marketing expense to adjusted sales and marketing expense: Year Ended December 31, 2022 2023 2024 (in millions, except percentages) Sales and marketing expense $ 660 $ 961 $ 808 Adjusted to exclude the following: Depreciation and amortization expense (5) (8) (8) Stock-based compensation expense (1) (4) (316) (62) Payroll taxes related to stock-based compensation (2) — (2) (4) Acquisition-related expenses 2 4 — Restructuring charges (3) — — (3) Adjusted sales and marketing expense $ 653 $ 639 $ 731 Sales and marketing expense as a percent of GTV 2.3 % 3.2 % 2.4 % Adjusted sales and marketing expense as a percent of GTV 2.3 % 2.1 % 2.2 % ___________ (1) The year ended December 31, 2024 includes an $8 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for terminated employees in connection with the restructuring plan.
Immediately subsequent to the closing of the IPO, we issued and sold 5,833,333 shares of our Series A Preferred Stock in a private placement at $30.00 per share and received $175 million in proceeds.
Immediately subsequent to the closing of the IPO, we issued and sold 5,833,333 shares of our Series A Preferred Stock in a private placement at $30.00 per share and received $175 million in proceeds. For additional information, see Note 1 — Business included in Part II, Item 8 of this Annual Report on Form 10-K.
Because of these limitations, we consider, and you should consider, Adjusted EBITDA together with other operating and financial performance measures presented in accordance with GAAP. 84 Table of Contents The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with GAAP: Year Ended December 31, 2021 2022 2023 (in millions, except percentages) Net income (loss) $ (73) $ 428 $ (1,622) Add (deduct): Provision for (benefit from) income taxes 1 (357) (439) Interest income (2) (17) (81) Other income (expense), net (12) 8 — Depreciation and amortization expense 16 34 43 Stock-based compensation expense 22 33 2,756 Payroll taxes related to stock-based compensation (1) — — 24 Certain legal and regulatory accruals and settlements, net (2) 46 50 (4) Reserves for sales and other indirect taxes (3) 13 (1) (35) COVID-19 response initiatives (4) 3 — — Acquisition-related expenses 10 4 (4) Other (5) 10 5 3 Adjusted EBITDA $ 34 $ 187 $ 641 GTV $ 24,909 $ 28,826 $ 30,322 Net income (loss) as a percent of GTV (0.3) % 1.5 % (5.3) % Adjusted EBITDA as a percent of GTV 0.1 % 0.6 % 2.1 % Revenue $ 1,834 $ 2,551 $ 3,042 Net income (loss) as a percent of revenue (4) % 17 % (53) % Adjusted EBITDA margin 2 % 7 % 21 % ___________ (1) Represents employer payroll taxes related to the vesting and settlement of certain equity awards.
The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated in accordance with GAAP: Year Ended December 31, 2022 2023 2024 (in millions, except percentages) Net income (loss) $ 428 $ (1,622) $ 457 Add (deduct): Provision for (benefit from) income taxes (357) (439) 95 Interest income (17) (81) (66) Other expense, net 8 — 3 Depreciation and amortization expense 34 43 56 Stock-based compensation expense (1) 33 2,756 300 Payroll taxes related to stock-based compensation (2) — 24 24 Certain legal and regulatory accruals and settlements, net (3) 50 (4) 10 Reserves for sales and other indirect taxes (4) (1) (35) (14) Acquisition-related expenses 4 (4) 2 Restructuring charges (5) — — 18 Other (6) 5 3 — Adjusted EBITDA $ 187 $ 641 $ 885 GTV $ 28,826 $ 30,322 $ 33,461 Net income (loss) as a percent of GTV 1.5 % (5.3) % 1.4 % Adjusted EBITDA as a percent of GTV 0.6 % 2.1 % 2.6 % Revenue $ 2,551 $ 3,042 $ 3,378 Net income (loss) as a percent of revenue 17 % (53) % 14 % Adjusted EBITDA margin 7 % 21 % 26 % ___________ (1) The year ended December 31, 2024 includes an aggregate $95 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for executive departures in the first quarter of 2024 and for terminated employees in connection with the restructuring plan.
In addition, our advertising and other investment rate may fluctuate, particularly during periods of acceleration or decreases in our GTV growth as well as periods in which we generate more GTV growth from sources where we historically do not provide advertising, such as retailers’ owned and operated online storefronts utilizing Instacart API that do not partner with Carrot Ads.
We also expect advertising and other investment rate to fluctuate during periods in which we generate more GTV from sources where we do not provide advertising or where we have recently enabled advertising, such as from certain new offerings or use cases and from retailers’ owned and operated online storefronts including those utilizing Instacart API that do not partner with Carrot Ads.
Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Overview Instacart is powering the future of grocery through technology. We partner with retailers to help them successfully navigate the digital transformation of their businesses.
Overview Instacart is powering the future of grocery through technology. We partner with retailers to help them successfully navigate the digital transformation of their businesses.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Key Financial and Operational Highlights We use the following financial and key business metrics to help us evaluate the health of our business, identify trends affecting our performance, formulate business plans, and make strategic decisions: Year Ended December 31, 2021 to 2022 2022 to 2023 2021 2022 2023 % Change % Change (in millions, except percentages) Orders 223.4 262.6 269.2 18 % 3 % GTV $ 24,909 $ 28,826 $ 30,322 16 % 5 % Revenue $ 1,834 $ 2,551 $ 3,042 39 % 19 % Gross profit $ 1,226 $ 1,831 $ 2,278 49 % 24 % Gross margin 67 % 72 % 75 % 7 % 4 % Gross profit as a percent of GTV 4.9 % 6.4 % 7.5 % 31 % 17 % Net income (loss) (1) $ (73) $ 428 $ (1,622) NM NM Net income (loss) as a percent of revenue (4) % 17 % (53) % NM NM Net income (loss) as a percent of GTV (0.3) % 1.5 % (5.3) % NM NM Adjusted EBITDA (2) $ 34 $ 187 $ 641 450 % 243 % Adjusted EBITDA margin (2) 2 % 7 % 21 % 250 % 200 % Adjusted EBITDA as a percent of GTV (2) 0.1 % 0.6 % 2.1 % 500 % 250 % ___________ “NM” - not meaningful (1) Net loss for the year ended December, 31 2023, includes $2.6 billion of stock-based compensation associated with the cumulative vesting of certain equity awards in connection with our IPO in the third quarter of 2023.
For additional information about the risks to our business related to independent contractor classification, see the section titled “Risk Factors—Risks Related to Our Legal and Regulatory Environment—If the contractor status of shoppers who use Instacart is successfully challenged, or if additional requirements are placed on our engagement of independent contractors, we may face adverse business, financial, tax, legal, and other consequences.” Key Financial and Operational Highlights We use the following financial and key business metrics to help us evaluate the health of our business, identify trends affecting our performance, formulate business plans, and make strategic decisions: Year Ended December 31, 2022 to 2023 2023 to 2024 2022 2023 2024 % Change % Change (in millions, except percentages) Orders 262.6 269.2 294.0 3 % 9 % GTV $ 28,826 $ 30,322 $ 33,461 5 % 10 % Revenue $ 2,551 $ 3,042 $ 3,378 19 % 11 % Gross profit $ 1,831 $ 2,278 $ 2,542 24 % 12 % Gross margin 72 % 75 % 75 % Gross profit as a percent of GTV 6.4 % 7.5 % 7.6 % Net income (loss) (1) $ 428 $ (1,622) $ 457 NM (128) % Net income (loss) as a percent of revenue 17 % (53) % 14 % Net income (loss) as a percent of GTV 1.5 % (5.3) % 1.4 % Adjusted EBITDA (2) $ 187 $ 641 $ 885 243 % 38 % Adjusted EBITDA margin (2) 7 % 21 % 26 % Adjusted EBITDA as a percent of GTV (2) 0.6 % 2.1 % 2.6 % ___________ “NM” - not meaningful (1) Net loss for the year ended December 31, 2023 includes $2.6 billion of stock-based compensation expense associated with the cumulative vesting of certain equity awards in connection with our IPO in the third quarter of 2023.
Other Income (Expense), Net Other income (expense), net primarily consists of income related to legal settlements and gains and losses from transactions denominated in a currency other than the functional currency.
Other Expense, Net Other expense, net primarily consists of gains and losses from transactions denominated in a currency other than the functional currency. Interest Income Interest income consists primarily of interest earned on our cash and cash equivalents, restricted cash and cash equivalents, and marketable securities.
For example, decreases in consumer discretionary income due to inflationary or recessionary economic pressures and rising interest rates, as well as cessation of government aid, have 70 Table of Contents adversely impacted and continue to adversely impact order volumes, customer acquisition and retention, changing consumer preferences, and demand for premium or discretionary grocery purchases.
For example, decreases in consumer discretionary income due to inflationary or recessionary economic pressures and interest rate fluctuations, may adversely impact order volumes, customer acquisition and retention, and demand for premium or discretionary grocery purchases.
The following table provides a reconciliation of operations and support expense to adjusted operations and support expense: Year Ended December 31, 2021 2022 2023 (in millions, except percentages) Operations and support $ 262 $ 252 $ 344 Adjusted to exclude the following: Depreciation and amortization expense (1) (2) (2) Stock-based compensation expense (1) — (90) Payroll taxes related to stock-based compensation (1) — — (2) COVID-19 response initiatives (2) (3) — — Adjusted operations and support $ 257 $ 250 $ 250 Operations and support as a percent of GTV 1.1 % 0.9 % 1.1 % Adjusted operations and support as a percent of GTV 1.0 % 0.9 % 0.8 % ___________ (1) Represents employer payroll taxes related to the vesting and settlement of certain equity awards.
The following table provides a reconciliation of operations and support expense to adjusted operations and support expense: Year Ended December 31, 2022 2023 2024 (in millions, except percentages) Operations and support expense $ 252 $ 344 $ 278 Adjusted to exclude the following: Depreciation and amortization expense (2) (2) (2) Stock-based compensation expense (1) — (90) (13) Payroll taxes related to stock-based compensation (2) — (2) (2) Restructuring charges (3) — — (2) Adjusted operations and support expense $ 250 $ 250 $ 259 Operations and support expense as a percent of GTV 0.9 % 1.1 % 0.8 % Adjusted operations and support expense as a percent of GTV 0.9 % 0.8 % 0.8 % ___________ (1) Stock-based compensation expense for the year ended December 31, 2024 was offset by a $4 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for terminated employees in connection with the restructuring plan.
Although we believe our assumptions, judgments, and estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of any tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements. We did not recognize certain tax benefits from uncertain tax positions within the provision for income taxes.
The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits for which future realization is uncertain. 84 Table of Contents Although we believe our assumptions, judgments, and estimates are reasonable, changes in tax laws or our interpretation of tax laws and the resolution of any tax audits could significantly impact the amounts provided for income taxes in our consolidated financial statements.
The following table provides a reconciliation of operating expenses to adjusted total operating expenses: Year Ended December 31, 2021 2022 2023 (in millions, except percentages) Total operating expenses $ 1,312 $ 1,769 $ 4,420 Adjusted to exclude to the following: Depreciation and amortization expense (8) (14) (18) Stock-based compensation expense (22) (33) (2,738) Payroll taxes related to stock-based compensation (1) — — (24) Certain legal and regulatory accruals and settlements, net (2) (46) (50) 4 Reserves for sales and other indirect taxes (3) (13) 1 35 COVID-19 response initiatives (4) (3) — — Acquisition-related expenses (10) (4) 4 Other (5) (10) (5) (3) Adjusted total operating expenses $ 1,200 $ 1,664 $ 1,680 Total operating expenses as a percent of GTV 5.3 % 6.1 % 14.6 % Adjusted total operating expenses as a percent of GTV 4.8 % 5.8 % 5.5 % ___________ (1) Represents employer payroll taxes related to the vesting and settlement of certain equity awards.
We exclude payroll taxes related to the vesting and settlement of certain equity awards, certain legal and regulatory accruals and settlements, net, reserves for sales and other indirect taxes, acquisition-related expenses, restructuring charges, non-capitalizable expenses related to the public listing of our common stock, and issuance costs related to the issuance of our Series A Preferred Stock as these are not indicative of our operating performance. 79 Table of Contents The following table provides a reconciliation of operating expenses to adjusted total operating expenses: Year Ended December 31, 2022 2023 2024 (in millions, except percentages) Total operating expenses $ 1,769 $ 4,420 $ 2,053 Adjusted to exclude to the following: Depreciation and amortization expense (14) (18) (19) Stock-based compensation expense (1) (33) (2,738) (292) Payroll taxes related to stock-based compensation (2) — (24) (24) Certain legal and regulatory accruals and settlements, net (3) (50) 4 (10) Reserves for sales and other indirect taxes (4) 1 35 14 Acquisition-related expenses (4) 4 (2) Restructuring charges (5) — — (18) Other (6) (5) (3) — Adjusted total operating expenses $ 1,664 $ 1,680 $ 1,702 Total operating expenses as a percent of GTV 6.1 % 14.6 % 6.1 % Adjusted total operating expenses as a percent of GTV 5.8 % 5.5 % 5.1 % ___________ (1) The year ended December 31, 2024 includes an aggregate $95 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for executive departures in the first quarter of 2024 and for terminated employees in connection with the restructuring plan.
We believe this adjustment is useful for investors in understanding our operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers. (4) Represents the cost of personal protective equipment distributed to shoppers during the COVID-19 pandemic.
We believe this adjustment is useful for investors in understanding our underlying operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers. (5) Represents severance payments and other related benefits for terminated employees in connection with the restructuring plan.
The following table provides a reconciliation of research and development expense to adjusted research and development expense: Year Ended December 31, 2021 2022 2023 (in millions, except percentages) Research and development $ 368 $ 518 $ 2,312 Adjusted to exclude the following: Depreciation and amortization expense (3) (4) (4) Stock-based compensation expense (9) (18) (1,800) Payroll taxes related to stock-based compensation (1) — — (14) Acquisition-related expenses (3) (1) — Adjusted research and development $ 353 $ 495 $ 494 Research and development as a percent of GTV 1.5 % 1.8 % 7.6 % Adjusted research and development as a percent of GTV 1.4 % 1.7 % 1.6 % ___________ (1) Represents employer payroll taxes related to the vesting and settlement of certain equity awards. 86 Table of Contents Adjusted Sales and Marketing and Adjusted Sales and Marketing as a Percent of GTV We define adjusted sales and marketing expense as sales and marketing expense excluding depreciation and amortization expense, stock-based compensation expense, payroll taxes related to stock-based compensation, and acquisition-related expenses.
We exclude depreciation and amortization expense and stock-based compensation expense as they are non-cash in nature and we exclude payroll taxes related to the vesting and settlement of certain equity awards, acquisition-related expenses, and restructuring charges as they are not indicative of our operating performance. 77 Table of Contents The following table provides a reconciliation of research and development expense to adjusted research and development expense: Year Ended December 31, 2022 2023 2024 (in millions, except percentages) Research and development expense $ 518 $ 2,312 $ 604 Adjusted to exclude the following: Depreciation and amortization expense (4) (4) (5) Stock-based compensation expense (1) (18) (1,800) (144) Payroll taxes related to stock-based compensation (2) — (14) (15) Acquisition-related expenses (1) — — Restructuring charges (3) — — (9) Adjusted research and development expense $ 495 $ 494 $ 431 Research and development expense as a percent of GTV 1.8 % 7.6 % 1.8 % Adjusted research and development expense as a percent of GTV 1.7 % 1.6 % 1.3 % ___________ (1) The year ended December 31, 2024 includes a $79 million benefit related to the reversal of previously recognized stock-based compensation expense for unvested equity awards for executive departures in the first quarter of 2024, and for terminated employees in connection with the restructuring plan.
Gross Profit, Gross Margin, and Gross Profit as a Percent of GTV Gross profit is defined as revenue less cost of revenue, and gross margin is defined as gross profit as a percent of revenue. We believe that gross profit, gross margin, gross profit as a percent of GTV are important indicators of the growth and efficiencies of our business.
Gross Profit, Gross Margin, and Gross Profit as a Percent of GTV Gross profit is defined as revenue less cost of revenue, and gross margin is defined as gross profit as a percent of revenue.
We believe this adjustment is useful for investors in understanding our operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers. (4) Represents the cost of all personal protective equipment distributed to shoppers during the COVID-19 pandemic.
We believe this adjustment is useful for investors in understanding our underlying operating performance because in these cases, the taxes were not intended to be a cost to us but rather are to be borne by the customers. (5) Represents severance payments and other related benefits for terminated employees in connection with the restructuring plan.
During the year ended December 31, 2023, we repurchased and subsequently retired 1.4 million shares of our common stock for an aggregate purchase price of $36 million under the share repurchase program. As of December 31, 2023, we had $464 million available to repurchase shares pursuant to the share repurchase program.
During the year ended December 31, 2024, we repurchased and immediately retired 46 million shares of our common stock for an aggregate purchase price of $1.4 billion including broker commissions, fees, and excise taxes, under the share repurchase programs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs the impact of foreign currency exchange rates has not been material to our historical results of operations, we have not entered into derivative or hedging transactions, but we may do so in the future if our exposure to foreign currency becomes more significant. 95 Table of Contents Interest Rate Risk As of December 31, 2023, we had cash and cash equivalents of $2,137 million and marketable securities of $49 million invested in a variety of securities, including money market funds, commercial paper, U.S. government and agency debt securities, corporate debt securities.
Biggest changeAs the impact of foreign currency exchange rates has not been material to our historical results of operations, we have not entered into derivative or hedging transactions, but we may do so in the future if our exposure to foreign currency becomes more significant.
While we have previously implemented certain shopper incentives in response to these factors, persistent or increased shopper shortages may require us to reintroduce or further increase shopper incentives to ensure sufficient shoppers are available to meet demand or provide additional consumer incentives or refunds due to shopper delays or incorrect orders, which have historically occurred and reduce our revenue and profitability.
While we have previously implemented certain shopper incentives in response to these factors, persistent or increased shopper shortages may require us to reintroduce or further increase shopper incentives to ensure sufficient shoppers are available to meet demand or provide additional consumer incentives or refunds due to shopper delays or incorrect orders, which have historically occurred and reduced our revenue and profitability.
Certain of our new offerings focused on value and affordability, such as the addition of discount grocers to Instacart, continued customer promotions, no rush delivery, Instacart+ members-only discounts, and acceptance of other payment options may improve customer accessibility to online grocery and help offset pricing challenges faced by customers due to inflationary pressures and customer fees.
Certain of our offerings focused on affordability, such as the addition of discount grocers to Instacart, continued customer promotions, no rush delivery, Instacart+ members-only discounts, and acceptance of other payment options may improve customer accessibility to online grocery and help offset pricing challenges faced by customers due to inflationary pressures and customer fees.
In addition, we had $156 million of restricted cash and cash equivalents primarily due to legally restricted funds maintained in a bank account pursuant to an agreement with a payment card issuer and outstanding letters of credit established in connection with lease agreements for our facilities. Our cash, cash equivalents, and marketable securities are held for working capital purposes.
In addition, we had $171 million of restricted cash and cash equivalents primarily due to legally restricted funds maintained in a bank account pursuant to an agreement with a payment card issuer and outstanding letters of credit established in connection with lease agreements for our facilities. Our cash, cash equivalents, and marketable securities are held for working capital purposes.
However, we cannot predict whether such offerings will offset or mitigate the negative impacts of inflationary pressures to our business, such as general reductions in discretionary spending by customers. Our inability or failure to address challenges relating to inflation could harm our business, financial condition, and results of operations. 96 Table of Contents
However, we cannot predict whether such offerings will offset or mitigate the negative impacts of inflationary pressures to our business, such as general reductions in discretionary spending by customers. Our inability or failure to address challenges relating to inflation could harm our business, financial condition, and results of operations. 86 Table of Contents
We may be exposed to further interest rate risk if we revise our strategy to invest in longer term securities in the future. A hypothetical 10% increase or decrease in interest rates would not have had a material impact on our consolidated financial statements as of December 31, 2023.
We may be exposed to further interest rate risk if we revise our strategy to invest in longer term securities in the future. A hypothetical 10% increase or decrease in interest rates would not have had a material impact on our consolidated financial statements as of December 31, 2024.
These risks primarily include foreign currency and exchange risk, interest rate risk, and inflation risk as follows: Foreign Currency and Exchange Risk We transact business globally in multiple currencies, with the vast majority of our cash generated from revenue denominated in U.S. dollars and a small amount denominated in Canadian dollars, Australian dollars, and Chinese yuan.
These risks primarily include foreign currency and exchange risk, interest rate risk, and inflation risk as follows: Foreign Currency and Exchange Risk We transact business globally in multiple currencies, with the vast majority of our cash generated from revenue denominated in U.S. dollars and a small amount denominated in Canadian dollars, Australian dollars, and euros.
The effect of a hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material impact on our consolidated financial statements.
The effect of a hypothetical 20% change in foreign currency exchange rates applicable to our business would not have a material impact on our consolidated financial statements.
Higher retailer prices, resulting in increased grocery costs and reduced consumer discretionary spending have negatively impacted consumer demand for online grocery as consumers return to in-store shopping to save on service and delivery fees and also have reduced order frequency, driven lower order volumes, and impacted average order values.
Higher retailer prices, resulting in increased grocery costs and reduced consumer discretionary spending have negatively impacted consumer demand for online grocery as consumers return to in-store shopping to save on service and delivery fees and also have reduced order frequency, driven 85 Table of Contents lower order volumes, and impacted average order values.
Customers have and may continue to reduce the number of items purchased overall, which has produced fulfillment efficiencies in the short term but may harm our revenue and margin as inflationary pressures subside. We may also not be able to fully offset higher costs through operational efficiencies or price increases.
Customers have and may continue to reduce spending on more premium products, and our brand partners have and may continue to reduce their overall advertising budgets, either of which could harm our revenue and margin. We may also not be able to fully offset higher costs through operational efficiencies or price increases.
As a result, we have experienced and expect to continue experiencing lower growth in GTV and orders, which would negatively impact our revenue and margin. Customers have and may continue to reduce spending on more premium products, and our brand partners have and may continue to reduce their overall advertising budgets, either of which could harm our revenue and margin.
As a result of these factors, we may experience fluctuations in GTV and orders, which could negatively impact our revenue and margin.
Added
Interest Rate Risk As of December 31, 2024, we had cash and cash equivalents of $1.3 billion and marketable securities of $91 million invested in a variety of securities, including money market funds and U.S. government and agency securities.

Other CART 10-K year-over-year comparisons